Agent banking deposits hit Tk 137bn

Published : 21 Dec 2020, 10:36

According to Bangladesh Bank (BB) details, collection of deposits via agent banking outlets exceeded Tk 137.47 billion in October 2020, up from Tk 65.05 billion in October 2019.

Since launching the agent banking system seven years ago, over the last 12 months, the banking sector has hit a new milestone in the accumulation of deposits through the agent banking system.

In October, the number of agent banking accounts stood at 87.86 lakh. Of the accounts, rural areas accounted for 68.06 lakh and urban areas accounted for 19.8 lakh.

Despite the corona pandemic, on the other hand, loan disbursement through the agent banking service also rose. Total disbursement of loans stood at Tk 10.87 billion until September of this year, an increase of 61.3 percent over the first quarter.

In 2013, BB released the Agent Banking Guidelines to bring banking services to the most remote corners of the world.

Md Serajul Islam, Executive Director and spokesperson of the Bangladesh Bank, said the central bank stressed the inclusion of more people in the banking system by concentrating explicitly on agent banking.

By opening a large number of agent banking outlets and running those across the country with policy support from the central bank, some commercial banks have proven their excellence, he added.

Islami Bank Bangladesh holds the highest proportion in terms of deposit collection, followed by Dutch-Bangla Bank, Bank Asia, Al-Arafah Islami Bank and Agrani Bank Limited.

The largest network of agent banking outlets operates under the private commercial banks of Islami Bank Bangladesh Limited (IBBL).

IBBL Executive Director, Md. Mahbub ul Alam said, "Agent banking offers the underserved population limited banking and financial services by engaging representatives under a valid agency agreement." It is an outlet owner who, on behalf of a bank, performs banking transactions.

Agents offer services under the government's social safety net schemes, such as cash deposits, withdrawals, remittance disbursement, small value loan disbursement and loan recovery, and cash payments.

In addition, Mahbub ul Alam said, the funds mobilized from the agent banking wings are also enhancing the financial strength of the banking sector.

In October, via the agent banking program, banks disbursed loans of Tk 18.4 billion to their clients. Of this number, 0.98 billion Tk was paid out in rural areas and 0.86 billion Tk in urban areas.

In October 2019, banks' credit issuance through their agent banking windows was only Tk 0.39 billion.

BB data also shows that the volume of transactions through the agent banking system jumped from Tk 301.18 billion in the previous month and Tk 151.78 billion a year earlier to Tk 323.51 billion at the end of October.

While deposit mobilization in rural areas has increased significantly, the issuance of loans to rural people has remained low, given the volume of deposit collection, BB officials said.

Resources would flow to urban areas if banks were unwilling to issue credit through their agent banking windows to individuals in rural areas, they said.

Taking the issue into account, the central bank is pursuing banks to place their agent banking wings' focus on credit issuance.

Although the disbursement of the loan has increased in recent months, the amount remained low in proportion to the deposit received from the bank wings of the agent.

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