Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
M. Nazeem A. Choudhury, Deputy Managing Director, Prime Bank PLC during an interview with The Financial Express recently gave his views on agent banking and performance of the Prime Bank with regard to this grassroots banking that uniquely helps financial inclusion.
Excerpts of the interview follow:
Agent Banking at Prime Bank PLC has developed into a strategic and inclusive channel to deliver formal banking services to underserved and remote areas of Bangladesh. Introduced in December 2020 in line with Bangladesh Bank's financial inclusion agenda, the initiative focused on reaching unbanked and underbanked communities where traditional branches are not viable. Initially centered on small savings and deposit mobilization for rural households, farmers, garment workers, and low-income earners, the model emphasized strong agent selection, secure technology, biometric verification, and real-time transactions to ensure trust and transparency. Over time, Prime Bank expanded services to include remittance disbursement, fund transfers, bill payments, account opening, and credit linkage for micro and SME customers. With 174 agent outlets nationwide, Agent Banking has become a cost-effective core distribution channel for Prime Bank, supporting rural deposit growth, women's financial inclusion, and sustainable expansion of formal banking services.
Traditional banking and agent banking differ primarily in how services are delivered, their cost structures and the customer segments they serve. Traditional banking operates through full-service branches managed directly by the bank, requiring significant investment in infrastructure, staffing and ongoing operational expenses. These branches are usually located in urban and semi-urban areas and offer a comprehensive range of products, including loan and investment facilities, trade finance and advisory services. The controlled branch environment ensures strong governance and lower operational risk but limits outreach to remote and low-volume markets.
In contrast, agent banking delivers essential banking services through third-party agents such as local shops or businesses appointed by the bank. This model relies on existing infrastructure, making it highly cost-efficient and suitable for rural and underserved areas. Services typically include deposits, withdrawals, remittance disbursement, fund transfers, bill payments and basic account opening. Agent banking uses technology-enabled platforms with biometric authentication and real-time connectivity, supported by centralized monitoring to manage risks. Overall, agent banking enhances financial inclusion and accessibility, while traditional banking focuses on depth, complexity, and relationship-based services -- together creating a complementary and inclusive banking ecosystem.
Prime Bank formally launched its Agent Banking services on 30 December 2020, with the first outlets becoming operational in late December 2020 and early January 2021 in areas such as Khilkhet, Dania and Ashulia. This initiative marked a significant step in expanding the Bank's alternative delivery channels, enabling customers to open accounts, deposit and withdraw cash and access basic banking services through authorized local agents instead of visiting traditional branches.
The primary reason behind introducing Agent Banking was to advance financial inclusion by reaching unbanked and underbanked populations, particularly in rural and semi-urban areas where establishing full-fledged branches is often not commercially viable. A large segment of the population previously had limited access to formal banking due to distance, cost and infrastructure constraints. Prime Bank's Agent Banking has enabled banking services to be closer to these communities in a convenient and affordable manner.
Additionally, Agent Banking offers a cost-effective model by leveraging existing local businesses as service points, significantly reducing capital and operating expenses. The initiative also supports national financial inclusion goals by promoting savings, facilitating remittance flows, and enabling secure, real-time transactions through digital platforms and biometric verification. Overall, Agent Banking complements Prime Bank's broader digital transformation and growth strategy, helping the Bank expand its reach while supporting inclusive and sustainable economic development.
As of the end of December 2025, Prime Bank operates around 174 agent banking outlets across Bangladesh. Of these, approximately 30 percent are located in urban areas, while the remaining 70 percent are situated in rural and semi-rural regions. This urban- rural distribution reflects the Bank's strategic priority to expand formal banking services beyond city centers and reach communities where access to traditional branches remains limited.
The stronger focus on rural areas is driven by the high demand for basic banking services such as savings, cash transactions, and remittance disbursement in these regions. Agent banking enables Prime Bank to serve these customers in a convenient and cost-effective manner, closer to their homes and workplaces. The approach is also aligned with Bangladesh Bank's financial inclusion guidelines, which encourage banks to establish a greater presence in rural areas. Overall, the outlet distribution highlights Prime Bank's commitment to inclusive growth and nationwide financial access.
Yes, agent banking is an effective and low-cost way for commercial banks to expand services to unbanked populations and Prime Bank PLC provides a clear example of this impact. Unlike traditional branches, which require significant investment in infrastructure, staffing and regulatory processes, agent banking uses existing local businesses supported by digital platforms, enabling rapid and economical expansion. Since launching agent banking in late 2020, Prime Bank has quickly established a presence in remote rural and semi-urban areas where branch banking was not feasible. This approach has delivered strong results, with rural deposits growing by around 150 percent year-on-year and rural account numbers increasing by approximately 125 percent year-on-year. Prime Bank's experience shows that agent banking accelerates outreach, reduces operating costs, and effectively integrates unbanked communities into the formal banking system, making it a sustainable model for inclusive growth.
Agent banking has driven strong deposit growth, with over 200 % increase in deposits compared to earlier baseline periods for the bank's agent outlets. Agent banking is becoming an increasingly meaningful source of low-cost deposits for the bank. Agent banking advances are growing, with loan disbursement activity picking up especially in micro and small business segments. Advances disbursed through agent outlets are still a smaller part of the bank's total lending, described internally as "insignificant" so far compared with its overall loan portfolio.
The smooth operation and nationwide expansion of agent banking face several interconnected challenges that banks must address carefully. Operationally, selecting reliable agents, ensuring continuous training, managing cash liquidity, and monitoring remote outlets remain critical, particularly in geographically hard-to-reach areas where infrastructure is weak. These challenges are compounded by higher risks of fraud and mismanagement if oversight is not supported by strong digital controls.
Technological limitations such as poor internet connectivity, system integration issues and cybersecurity risks can disrupt real-time transactions and weaken customer trust. From a regulatory perspective, maintaining effective KYC and AML compliance at the agent level, conducting regular audits across a wide network and adapting to evolving regulatory requirements add complexity to operations.
Behavioral and social factors also play a role. Limited financial literacy, strong preference for cash and trust issues- especially among women and marginalized groups- can slow adoption. Finally, ensuring the financial sustainability of agent banking is essential, as low-value transactions, incentive alignment for agents, and scaling costs must be managed carefully. Overcoming these challenges is key to building a resilient and inclusive agent banking ecosystem.