The school banking scheme that the government has initiated is commendable as it helps the new generation to become capable of making informed financial decisions and developing the habit of saving from an early age. Since the launch of the scheme in 2010, banks have opened 24.51 lakh accounts, with Tk 1,821 crore in deposit. However, account holders under the scheme pay a higher amount of tax as students do not have tax-payer’s identification number. The income tax law requires anyone without a TIN to pay 15 per cent in tax at source. Parents, who maintain the account on behalf of students aged below 18 years, pay a higher tax against deposits they make in these accounts and feel discouraged. The central bank has, therefore, requested the National Board of Review to consider the guardian’s tax identification number so they can enjoy the benefit of 10 per cent tax deduction. The Islami Bank has also requested the board to consider the acceptance of student’s identity cards of educational institutions to open accounts. It appears that the revenue board should consider the central bank requests.

Making schoolchildren financially literate is a grand initiative aimed at creating greater access to financial services for an age group that usually remains outside the purview of banking services. Under the scheme, students are allowed to open accounts, with the requirement for minimum balance and charges for account operation having been waived. The provisions are encouraging for students; but for parents, higher tax against the accounts is burdensome. It is an issue that the central bank should have considered before rolling out the scheme. The income tax provision for 15 per cent tax deduction against any account without tax identification numbers should not be applied to these accounts. This is yet another example of flawed financial planning. While the revenue board should make a decision about the request, it should also develop a monitoring mechanism to ensure that no parent abuses the scheme with the ill intention of tax evasion. The Bangladesh Bank should also ensure that students from rural and hard-to-reach areas have equal access to the scheme. Without a seamless nationwide access, the scheme will not be able to ensure the financial inclusiveness that it aims at.

The National Board of Revenue must, therefore, review the guideline for the school banking scheme and consider the request of the central bank. In so doing, it must also continue with the educational programmes at different schools about the rational management of income and benefits of routine saving so that students are actively involved in the management of their bank accounts. The provision for opening bank accounts solely managed by their parents will not bring about the desired outcome.