Prime Bank to get on agent banking bandwagon this year

Prime Bank plans to step into the agent banking arena this year as part of its push to widen footprint and cut reliance on branches, said its top executive. 

The bank received the agent banking licence from the central bank recently, Rahel Ahmed, its chief executive officer, told The Daily Star last week. "We would go for the implementation this year."

With this, Prime Bank joins a growing number of lenders who are putting less emphasis on branch-led banking and embracing agent banking as part of their move to reach the rural areas and cut costs.

Prime Bank has not opened any new branches in the last four years and has no plans to open any in the future either, Ahmed said.

The central bank introduced agent banking in 2013 to provide a safe alternative delivery channel of banking services to the underprivileged, under-served population who generally live in the remote locations that are beyond the reach of the traditional banking network.

It has so far issued licences to 27 banks for operating agent banking activities. Of them, 22 are in operation.

Bank Asia has been a pioneer in popularising the model, followed by Dutch-Bangla Bank.

Agent banking has allowed banks to expand 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.

The method is gaining popularity as a cost-effective delivery channel as well as a convenient way of getting banking services, the Bangladesh Bank said in its quarterly report for the January-March period.

Deposits soared 129 per cent year-on-year to Tk 8,535 crore at the end of March, the latest for which data is available. Loan disbursement grew 306 per cent to Tk 853 crore.

As of March, the total number of accounts, which could be opened with deposits ranging from Tk 10 to Tk 100, under the programme stood at 2.13 crore and aggregate deposits Tk 2,385 crore.

There are outlets 11,875 under 8,260 agents in the country.

About 65 lakh accounts were opened through the outlets, out of which 29.6 lakh are owned by women, BB data showed.

The year-on-year growth of agents, outlets, and accounts in the first quarter stood at 69.8, 51.5 and 123.5 per cent respectively.

Deposit, loans disbursed and inward remittance had a growth of 128.6 per cent, 220.3 per cent and 172 per cent respectively.

A staggering 87 per cent of the agents and 88 per cent of the outlets are located in the rural area in an indication that banks are contributing significantly to promote financial inclusion.

Gender-wise, female accounts constitute 45 per cent of the total accounts, male accounts 54 per cent and the remainder 1 per cent are held by institutions, the BB publication showed.

Of the deposits, 77 per cent are collected in rural areas. Sixty-six per cent of deposits come from male customers.

More than 70 per cent of loans were disbursed in the rural area. Of them, 69.4 per cent went to male customers, 5.8 per cent to female customers and 24.9 per cent to small enterprises.

Dutch-Bangla Bank has the highest number of outlets with 4,030 outlets, which is 33.9 per cent of the total outlets as of March, followed by Bank Asia at 29.8 per cent.

Bank Asia has the highest number of accounts at 24.6 lakh accounts, or 37.8 per cent of the total. It also disbursed the highest amount of loan of about Tk 276 crore, or 41 per cent of the total disbursement as of March.

Islami Bank Bangladesh had the highest amount of deposit with Tk 2,159 crore and Dutch-Bangla Bank distributed the highest amount of inward remittance of Tk 7,526 crore.

The central bank expects that more loans will be disbursed in future when more banks start disbursing loans through agent outlets.

"Thus, agent banking has a noteworthy impact on financial inclusion and potential to fill the market gap," the BB quarterly report said.