Agent banking on a roll

Overall deposits with agent banking accounts doubled in July compared to the same period a year ago as more and more people are keeping faith with the new banking model.

Deposit balance stood at Tk 5,251.3 crore in July last year and it rose to Tk 10,788.2 crore in the same month this year, Bangladesh Bank data shows.

Loan disbursement increased by 220 per cent to Tk 94.9 crore in the same period while utility bill payments were up 23.45 per cent to Tk 93.7 crore.

Migrant workers used the service to send home Tk 3,327.9 crore in the first month of the current fiscal, up 422 per cent from Tk 637.1 crore year-on-year.

The number of transactions rose 90 per cent to 76,61,508 in July compared to the same month in 2019 and transaction volume swelled by 151 per cent to Tk 28,415.3 crore.

The number of agents jumped by 47.75 per cent year-on-year to 9,180 in July while the total number of outlets reach 12,861 at the end of July this year, up 44.91 per cent compared to the same month a year ago, central bank data shows. 

As of July, there were 76,85,990 agent banking accounts in Bangladesh, which is 115 per cent higher than in the same month last year.

The number of accounts held by men advanced 83 per cent to 41,62,122 and the number of accounts owned by women went up by a staggering 167.87 per cent to 33,69,654 in July.

"Agent banking is increasingly establishing itself as a good model. People are using it at ease," said Md Arfan Ali, managing director of Bank Asia, who pioneered the new banking model in the country in January 2014.

He credited banks' presence within the reach and the opportunity to secure banking services as per their needs for the steady growth of agent banking.

Barring a few exceptions, outlets have remained open during the pandemic, taking people's confidence in the agent banking to a higher level, Ali said.

He said when Bank Asia rolled out their agent banking service, two things were kept in mind: promoting entrepreneurship and taking banking services to the people's doorsteps.

The owners of outlets are also driven to render good service because their success would also depend on attracting customers and retaining them, Ali said. 

The central bank introduced agent banking to provide a safe alternative delivery channel of banking services to the underprivileged, under-served population who generally live in remote locations that are beyond the reach of the traditional banking network.

It has so far issued licences to 28 banks for operating agent banking activities. Of them, 23 are in operation.

Recently, Prime Bank and NRB Global Bank secured agent banking licences from the central bank.

Agent banking has allowed the country's financial institutions to expand their businesses and accelerate financial inclusion using agents as intermediaries, according to the central bank.

It has now gone beyond the basic banking services such as cash deposits, cash withdrawal, and receipt of remittances. Rather, banks have started giving out small loans through these outlets.

In the April-June quarter, agent banking has continued to grow in all dimensions amidst severe business interruptions due to the Covid-19 pandemic, the central bank said in its quarterly report.

The model is gaining popularity as a cost-effective delivery channel as well as a convenient way of providing banking services to the mass people who would otherwise have remained beyond the reach of conventional branch banking.