Agent banking gains popularity fast

Agent banking is increasingly becoming popular in the rural area across the country as the number of agents and outlets has increased by 15.96 percent and by 12.59 percent respectively despite the Covid-19 pandemic, according to a Bangladesh Bank (BB) report.

Up to September 2020, 24 banks have embarked on agent banking operations through 10,163 agents and 14,016 outlets, said Bangladesh Bank which introduced such banking in 2013 to provide service to the under-privileged and under-served population living in remote locations that are beyond the reach of the traditional banking networks.

Banks are now delivering a variety of banking services including savings, loans, remittances, and various payment services such as utility bills, taxes, government transfer benefits to the customers through an agent.

According to the latest data, a cumulative 8,221,893 accounts have been opened through agent banking of which 3,749,087 accounts belong to female customers and 7,111,887 accounts belong to rural mass.

"The persistent positive growth of agent banking accounts amidst Covid-19 pandemic indicates the surging demand of agent banking services across different segments of population," said a BB official.

The share of female accounts opened through agent banking continues to keep the pace, indicating an increase of 9.94 percent during the reporting quarter, he said, adding that the gap between male and female accounts is narrowing down gradually signifying the increased participation of females in the formal financial system.

As of September 2020, top five banks have opened 98.96 percent of the total accounts opened through agent banking. Bank Asia has opened the highest number of 3,243,675 accounts, comprising of 39.45 percent.

Deposit collection has also increased significantly, total amount of deposit collection stood at Tk 13,040. 61 crore and loan disbursement at Tk 1,086. 95crore. Agent banks distributed remittance worth Tk 38,335.24 crore.

The major share of deposit, around 77 percent, has been accumulated from the rural area. The deposit collection from rural area has increased by 3 percentage points from the previous quarter which was 74 percent and this deposit can be utilized in investment opportunity in rural areas which can stimulate the local economy, the BB said in its report.

According to BB, agent banking is thus becoming popular channel of inward remittance distribution since beneficiaries are getting doorstep services fast.

The amount of inward remittances distributed by the agent outlets has increased significantly by 43.84 percent during this quarter.

"This remarkable remittance inflow through banks is a positive outcome of the government’s initiative of 2 percent cash incentive as well as some banks’ enthusiastic initiative of 1 percent more cash incentive on the remittance sent by the expatriates though agent banking," said BB in its report.

"The agent banking services of Bank Asia got huge response from clients in rural area during Covid-19 Pandemic. We had been able to provide all necessary supports for our clients in rural area," said Bank Asia President and Managing Director Arfan Ali.

He said Bank Asia has already in leading position in agent banking operation in the country and it has planned to expand such banking services to more remote rural areas to serve the unbanked population of the country.

The top five banks have disbursed 98.96 percent of the total loan disbursed through agent banking till September 2020. BRAC Bank has ranked top with largest volume of loan amounting Tk 553.75 crore, which is 50.94 percent of the total loans disbursed through agent banking.

Rural customers have received Tk 701. 88 crore, or 65 percent, of the total loan disbursed through agent banking till September 2020, which is very much in line with the objective of agent banking since the prime objective of this banking is to stimulate the rural economy.

Bangladesh Bank's chief spokesperson Sirajul Islam said agent banking has created a huge scope for rural people who are now getting various banking services from their respective areas.

Rural people now can open accounts with agent bank units at a nominal amount, they can deposit their small amounts and take loan. Agent bank units also reach remittances to rural people, he said, adding that so, agent bank units bring banking services to the doorstep of unbanked people in remote areas of the country.