The amount of accounts in agent banking in the nation reached the 1 crore mark in January 2021, after 7 years of the service launch.
The idea of agent banking was initiated by the central bank in 2013 with the goal to bring the unbanked people under the formal banking channel by taking the services to the remote locations of rural Bangladesh.
With the formation of agent banking guidelines in 2013, Bank Asia initiated the services in January 2014 and became the nation’s first bank to snatch at the opportunity of serving people in a cost-effective manner.
But after 7 years, the amount of agent banking accounts has reached 1.05 crore in February 2021 after the crossing of the one crore landmark in January 2021.
The number of agent banking accounts reached 1.01 crore in January 2021, an increase from 96.45 lakh from December 2020.
Of the 1.05 crore accounts, 77.83 per cent or 81.91 lakh accounts were opened in rural areas while the remaining 22.17 per cent or 23.33 lakh accounts were opened in the urban areas.
In terms of holding customer accounts, Bank Asia is leading among all the banks while Dutch-Bangla Bank, Islami Bank Bangladesh Limited, Al-Arafah Islami Bank and Agrani Bank are following suit.
After the coronavirus outbreak in Bangladesh, the agent banking became more relevant as a concept as the banks chose to refrain from opening branches during the outbreak to be cost-efficient.
Over on the other end, the number of agents and outlets of the banks during the outbreak expanded by almost 1.5 times in the space of one year.
The number of agents of the banks rose by 48.11 per cent or 3,938 to 12,123 in February 2021 from 8,185 in 2020. Besides, the number of bank outlets increased by 38.07 per cent or 4,494 to 16,296 in February this year from 11,802 in the same month of 2020.
From the year 2013, the central bank has so far issued licences to 28 banks to run agent banking services. Out of those 28, 26 banks are providing the service to the customers.
Sohail RK Hussain, managing director and chief executive officer of Meghna Bank, stated that, ‘The agent banking service was much effective during the pandemic when the banks were very busy with implementing the stimulus packages.’
Keeping the factors in consideration, Meghna Bank has filed an application with the central bank for permission to operate agent banking wings.
‘Banks use a number of distribution channels to reach their customers and agent banking is another such type of distribution channel,’ said Sohail, adding that the cost involved in agent banking is far lower than opening a branch.
‘That is how agent banking allows banks to gain a foothold in areas where it is not viable for the banks to have a presence by opening a branch,’ he said.
Besides, a segment of people do not get effective services from the branches due to their low transaction volumes and agent banking plays a vital role in fulfilling the needs of these people, said Sohail.
Alongside gaining a foothold in the rural areas through agent banking, the service allows the banks to strengthen their presence even in the urban areas, he said.
‘All in all, it’s a cost-efficient way of expanding the banks’ foothold among the segment of people who usually are not comfortable in availing banking services through branches,’ the managing director said.
The volume of transactions had seen an upturn, as it increased by 41.86 per cent or Tk 26,75,079 crore in a span of one year.
In February 2021, transactions through the agent banking wings of the banks increased to Tk 90,64,200 crore from Tk 63,89,121 crore in 2020.
Loan disbursement through the banks’ agent banking wings increased by 109.79 per cent, or Tk 100.9 crore, to Tk 192.8 crore in February 2021 from Tk 91.9 per cent in 2020 as the system became a much more cost-efficient way of availing banking services compared with branch-based banking.
Of the disbursements made in February, the banks disbursed Tk 117.1 crore for the rural areas against their disbursements of Tk 75.7 crore for the urban areas.
Apart from loan disbursement, the agent banking wings have also emerged as a cost-efficient way of deposit mobilization for the banks with the volume of deposit collection through agent banking increasing by 103.84 per cent or Tk 8,470.9 crore within a period of one year at the end of February 2021.
Deposit collection by the banks through agent banking reached Tk 16,628.5 crore in February 2021 from Tk 8,157.6 crore in 2020.