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23 April, 2019 00:00 00 AM
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Agent banking witnesses meteoric rise

FAISAL MAHMUD, Dhaka
Agent banking witnesses meteoric rise

The government’s initiative of bringing the large unbanked population of rural parts of Bangladesh under agent banking service is paying off in spades. Within the last few years, agent banking, comprising a network of banking agents who act as physical bank branches, has witnessed a spectacular rise.

According to the Bangladesh Bank data, after agent banking service was started in 2016, a total of 5,44,536 agent banking accounts were opened in 2016. During the first quarters of 2019, the number of accounts has risen to 18,73,004 marking a 61 per cent  rise from the previous year.

Outstanding balance with agent banking accounts stood at Tk 2,651 crore at the end of last quarter. The total number of agents rose to 3,847.

Terming this growth of agent banking ‘satisfactory’, Abul Bashar, general manager of Financial Inclusion of Bangladesh Bank, has said agent banking is gaining increasing popularity in the country’s rural areas.

The agent banking model has proven to be successful in many parts of the world. In Bangladesh, it is gaining popularity because a large part of rural population is still unbanked as the commercial banks are reluctant to open their branches there.

Talking with The Independent, Mirza Aminur Rahman, former head of transaction banking of Standard Chartered, has said agent banking is gaining popularity because, in emerging markets and rural areas, traditional banks have a tough time to reach out to customers.

Rahman, who now works as an independent consultant and financial advisor, has said opening and operating traditional bank branches are often not cost-effective.

“Operating a bank branch involves at least one teller at the front desk, a bank manager and bank employees specialising in areas such as mortgages and loans, and security. It is one of the reasons why banks are not keen on opening branches in rural areas,” he said.

Consequently, agent banking is a win-win-win for all parties involved, he said. “Agents win as they can sell a greater variety of specialised products and services on behalf of the banks to customers in remote regions.”

Rahman has added that customers win by getting easy access to accredited financial services providers, and banks win as they can ramp up their market share.

Arfan Ali, managing director of Bank Asia, the pioneer in agent banking service in Bangladesh, told The Independent that agent banking had been able to provide fruitful solutions for financial inclusion by leveraging on the low cost of operation for agent banking. The amount of money needed to open an agent banking booth is way smaller than the amount needed to open a banking branch. So as a business model, it is viable for the commercial banks.

Bank Asia provides two types of agent banking. One is agent banking booth established by private organisation and another one is established at the union digital centre of the Union Parishad. The number of privately owned booth is 250 and the rest are in union digital centre.

These Union Digital Centre which is being run by the government’s Access to Information (A2I) project is already providing around 40-50 different services to the people of the union. Many of those services are intricately related with the banking service because at the end, any type of service is related with some sort of financial transaction.

“Agent banking there works like human ATM. You can withdraw money through the biometric verification of your fingertips. We’ve already started receiving money for Porcha in our agent booth.

The agent booth is providing foreign remittance service. We are also taking electricity bills,” said Arfan Ali.

He believes that the union digital centre will become very strong in the coming days. “It will become the centre of all development activities at the union level.

This is, in fact, the vision of the government, making those digital centres  the hub of major economic activities.”

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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