Agent banking operation in the country's far-flung areas has turned out to be a money multiplier among unbanked population getting access to need-based services, including small-scale investment facilities. The banks through agent banking outlets across the country achieved aggregate deposits worth over Tk 6.51 billion (651.21 crore) up to June 30 last against over Tk 3.80 billion (380.68 crore) as of December, 2016, according to figures available with the Bangladesh Bank. The unbanked people of the country are in a race for account opening at the agent banking outlets mainly for having the experience of banking from remote areas. Especially remittance beneficiaries are feeling very spirited about opening such accounts to enjoy charge-free services.
Agent banking is a cost-effective service that has yielded remarkable results as far as the economic index based on remote areas is concerned. This has happened mainly due to inward foreign remittance without any charge. The situation relating to income inequality has also improved among those who have access to agent banking. Apart from that, women's empowerment is also increasing because of their easier access to small-scale loan facilities. This type of banking is getting momentum in the far-flung areas as the people there even never dreamt of this facility earlier.
On December 9, 2013 the Bangladesh Bank issued the agent banking guidelines, a landmark initiative mainly to bring the unbanked population under the umbrella of full-fledged banking services.
'Agent Banking' means providing limited-scale banking and financial services to the underserved population through engaged agents under a valid agency agreement, rather than a teller or cashier. It is the owner of an outlet who conducts banking transactions on behalf of a bank defined in the guidelines of the Bangladesh Bank
Through engaging authorised agents the bank runs the agent banking operation where the nominated agent must maintain an account with the concerned bank branches and the balance would not run higher than Tk 1.0 million (10 lakh), the Bangladesh Bank says in a circular. The circular also says agent banking must be operated in rural areas, not in urban areas, and the outlets must be brought under an insurance coverage.
The Bangladesh Bank has already given approval to more than a dozen banks to run the agent banking operation in remote areas, mainly in backwards areas of the country. Now many banks are joining the queue to get agent banking approval from the central bank.
Reportedly more than Tk 300 million in foreign remittance had been disbursed in the last October-December period. Of the banks disbursing remittances through the agent banking channel, Bank Asia disbursed 66 per cent, Al-Arafah Islami Bank Ltd 19 per cent and Dutch-Bangla Bank Ltd 14 per cent respectively as of December 31, 2016.
The agent banks collect small- scale cash deposits and facilitate withdrawals maintaining a ceiling as defined by the Bangladesh Bank apart from disbursing inward foreign remittances. They also disburse small loans and work on loan recovery apart from collections against utility bills. Cash payment under the social safety net programme of the government and fund transfer are also done through these outlets. Balance and statement inquiry services as well as receipt of clearing cheques are rendered by them. They also provide services like collection and processing of forms/documents in relation to account opening, loan application, credit and debit card application from public, post-sanction monitoring of loans and advances and follow-up on loan recovery.
Agent banking operation reduces the operating and establishment cost of a bank. This kind of services enhances a bank's outreach areas and its brand value. Agent banking can ensure the access of the marginalised people to several financial services in remote areas. It can work wonders in ensuring financial inclusion and materialising the dream of building a poverty-free Bangladesh.
This banking has been the cash-flow distribution channel in reaching out to the unbanked segment of the society, especially in geographically-dispersed locations, in addition to the existing customers, with a wide array of financial services. To attain the middle income country status from the lower middle income one agent banking operation is very important to serve the unbanked population. Agent banking is obviously revolutionising the financial inclusion as it eases payments made by different households.
Bank Asia Ltd, a scheduled commercial bank, is the pioneer in introducing the agent banking in the country and the bank has achieved the nearly 100 per cent deposit growth rate after opening such outlets. As of March 31 last the bank opened 1,182 outlets and the total deposits stood at over Tk 1.16 billion (116.71 crore). The fund was mobilised from 162,378 customers.
The Social Islami Bank Limited opened 61 agent banking outlets by September 30 and the total deposit stood at Tk 10 million from 10,433 accounts. The data from the Bangladesh Bank shows that Al-Arafah Islami Bank Limited inaugurated 106 agent banking outlets by October 22 across the country and the transaction volume was up to the mark. The country's first mobile banking operator Dutch-Bangla Bank Ltd is opening agent banking outlets in the remotest areas of the country. It opened 1,500 agent banking outlets by June 30 and the deposits stood at Tk 2.86 billion. The fourth-generation Modhumoti Bank and Midland Bank opened 148 and 15 agent banking outlets respectively. Moreover, the NRB Commercial Bank opened 203 agent outlets and managed deposits worth Tk 13.7 million. The First Security Islami Bank collected deposits worth Tk 43.2 million from nine outlets by June last. The state-owned Agrani Bank Ltd is also conducting its agent banking operation in the name of "AGRANI DOER BANKING".
All these banks are providing such cost-effective services to the doorsteps of unbanked population. The Bangladesh Bank as a watchdog should monitor the transactions daily, weekly and monthly, because some people may use this cost-effective channel for money-laundering, though the BB sets the transaction ceiling time to time. It should be ensured that security personnel are deployed by the concerned banks or agents with a view to keeping the depositors' money safe and the nearby police stations should be informed of the locations of outlets.
Bangladesh is a riverine country and a good number of people still live in areas far from upazila towns, for example, in haor areas of greater Kishoreganj and Sunamganj districts. The banks should take special care during opening the outlets so that people from backward areas lacking road communications can enjoy the banking facility.
About eight million expatriates are living in different countries across the world, mainly in Middle Eastern countries. Earlier they sent home a substantial amount of their hard-earned money through the banking channel that realised a minimum charge from the beneficiaries. The banks should set up agent banking outlets more and more in the areas where the numbers of expatriates are high. This kind of banking will flourish fast in those areas, as the people are very happy about remitting their money home using this banking facility without any charge.
The writer is Executive Officer of Social Islami Bank Ltd's Financial Administration Division.
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