Overview
Agent banking has currently been on the rise as banks are trying to reach unbanked people in the rural areas. According to experts, 25,000 agent banking outlets need to be set-up whereas there are only 5,791 agent bank outlets as of July – September 2018, as stated in the quarterly report on agent banking by Bangladesh Bank. Bangladesh Bank has a provision for agent banking published in 2013 but adequate operations only started in 2016. As per “Guidelines for agent banking (version 13)” from Bangladesh Bank – an agent must provide, as a minimum, cash deposit and cash withdrawal services and the agent’s activities would be within normal course of banking business of the scheduled banks but conducted at places other than bank premises/ATM booths. Agents must provide services in the designated business premises.
Market Projection
Current Status & Trends
Earlier, agent outlets were restricted to only cash deposits, cash withdrawals, and remittance payments. Recently they have started disbursing small loans as well. Until September this year, loan disbursement went up by 9.80% compared to the last quarter, at BDT 150 crore and deposit collection rose by 28% to BDT 2,577 crore. Most of the small credit loans are offered to farmers at high interest rates of up to 25% by microcredit firms and NGOs, according to a news report by The Daily Star. Despite of the Government setting up low interest rates of 9% on agriculture loans, the farmers still have to go through intermediaries who tax them high interest rates to retain profit for themselves. This, along with other similar cases can be found because of the scarcity of agent banks in decentralized locations, mostly outskirts of the country. In the last fiscal year 2017-‘18 alone, 37.19% of BDT 21,394 crore of agriculture loans came from NGOs.
Growth
Earlier, agent outlets were restricted to only cash deposits, cash withdrawals, and remittance payments. Recently they have started disbursing small loans as well. Until September this year, loan disbursement went up by 9.80% compared to the last quarter, at BDT 150 crore and deposit collection rose by 28% to BDT 2,577 crore. Most of the small credit loans are offered to farmers at high interest rates of up to 25% by microcredit firms and NGOs, according to a news report by The Daily Star. Despite of the Government setting up low interest rates of 9% on agriculture loans, the farmers still have to go through intermediaries who tax them high interest rates to retain profit for themselves. This, along with other similar cases can be found because of the scarcity of agent banks in decentralized locations, mostly outskirts of the country. In the last fiscal year 2017-‘18 alone, 37.19% of BDT 21,394 crore of agriculture loans came from NGOs.
Competitive Landscape
Key Players
At the beginning of 2016 only 10 banks were operational in agent banking but today the number has increased to 16. More recently, this year Trust Bank, South Bangla Agriculture and Commerce Bank, Brac Bank Ltd, and NRB Bank have acquired licenses for agent banking but have not yet launched the service.
List of Active Agent Banks
| Dutch – Bangla Bank Limited | Standard Bank Limited | Agrani Bank Limited | AB Bank Limited |
| Bank Asia | NRB Commercial Bank | Midland Bank | United Commercial Bank Limited |
| Al-Arafah Islami Bank | Mutual Trust Bank Limited | First Security Islami Bank | The Premier Bank Limited |
| Social Islami Bank Limited | Modhumoti Bank Limited | The City Bank | Islami Bank Bangladesh Limited |
Two major players in the agent banking field are DBBL and Bank Asia – covering 86% of the total agent banking accounts. As of March, 2018 – 884,680 accounts were secured by DBBL and 380,936 accounts were secured by Bank Asia, as shown in Bangladesh Bank data.
Way Forward
Agent banking services provide banking opportunities to underserved people in various parts of a country, being one of the major tools for financial inclusion where it brings everyone under the formal umbrella of banking. This helps in keeping track of money and its sources. Smaller loans can be disbursed more easily and a lot of people can be a part of the economy more directly. Intermediaries and schemers can be cut and more funds can be pushed towards business and investment.
The growth has been positive so far and more banks have taken up licenses and are waiting to initiate their launch. Agent banking is likely to change the formal banking landscape, and it will start to soar very fast.
