Lending portfolio of fast-growing agent banking remained much lower than deposits, according to a latest report, as the bankers seem tight-fisted in disbursing loans.
The report on state of agent banking, prepared for the October-December 2021 period and released Sunday by the central bank, shows the loan-to-deposit ratio in the agent-banking system now just 22 per cent although it is around 74 per cent on average in traditional banking.
Such lending or loan against deposit remained insignificant as most banks have yet to develop feasible infrastructures for loan disbursement and recovery through agent outlets.
Managing Director and CEO of the state-owned Agrani Bank Mohammad Shams-Ul-Islam told the FE that they would take initiative to raise lending volumes through the agent-banking outlets.
The bank has 400 agents across the country to operate the banking system unveiled in the country's financial system in 2013.
"You will see dramatic changes about the ratio in our banking at the end of this year," he said.
Managing Director and CEO at the fourth-generation private bank Modhumoti Bank Md. Shafiul Azam acknowledged that the ratio belied the expectation, because of handing out small loans.
He said: "This is low but it will expand soon."
He has already directed increased small loan disbursements through Modhumoti agent banking.
However, amidst the covid-19 pandemic, agent banking in Bangladesh continued to grow in all dimensions in the quarter ending December last.
The number of accounts opened through agent banking reaches 14.047 million, nearly 48 per cent belonging to female customers. And 12.12 million or more than 86 per cent belong to customers in the rural areas.
The number of accounts opened through agent banking had grown by nearly 9.0 per cent over the previous quarter ending September 2021.
"The persistent positive growth in agent-banking accounts amidst the covid-19 pandemic indicates the surging demand for agent-banking services across different segments of population," reads the quarterly report.
This report on agent banking indicates that the financial services delivered through agents are truly reaching the underprivileged segments of society even during the covid-19 pandemic.
As of December 2021, 29 banks carried out agent-banking activities through 19,247 outlets operated by 13,952 agents.
The number of agents had grown by 3.58 per cent while the number of outlets grown 6.47 per cent over the previous quarter.
At the end of December 2021, the amount of deposits accumulated in the agent-banking accounts is Tk 242.94 billion.
The amount of loan disbursement through these accounts is Tk 53.47 billion and the cumulative amount of inward remittances disbursed reaches Tk 823.43 billion.
The amount of inward remittances distributed by the agent outlets has increased over 10 per cent.
This remarkable increase in remittances channeled through agent banking seems to be a positive outcome of the government policy on 2.5-per cent cash incentives coupled with some banks' announcement of additional cash incentives on the remittances.
The report notes that the rise in remittances is due to quick delivery of the money to the beneficiaries through agent banking.
"Bangladesh Bank is closely monitoring progress and emphasising disbursement of loans to the rural people through the agent banking so as to stimulate the rural economy," the central bank commented in the report.