Agent banking expands 65% in a year

Agent banking, which started its journey more than eight years ago to provide banking services to the country's rural population, has expanded over 65% in a year on the back of large remittance inflows and comparatively better economic activities in rural areas amid the Covid-19 pandemic.

According to a Bangladesh Bank report, agent banking deposits also grew nearly 100%, loan disbursements 342.21%, and remittance inflows 155% between June 2020 and June 2021.

According to people concerned, the economic activities in rural areas were more active than in urban areas during the pandemic. As a result, there is a positive impact on agent banking. At the same time, the savings of people outside the banking services have started coming to the banks.

Islami Bank Bangladesh Limited started agent banking a little late. But in a short time, the bank's agent banking services have expanded enormously, and currently, it is at the top in collecting deposits and remittances.

In the meantime, the bank received deposits of Tk6,861 crore through agents, which is 33.66% of the total deposits of agent banking services. About one-third of the country's remittances have come through Islami Bank.

The agents of the bank are more advanced in receiving remittances. As of last June, Islam Bank has received 55.12% of the total remittances coming into the country through the agents.

"Our agent banking is at the forefront in collecting deposits and receiving remittances because we have agents in many countries," Mohammed Monirul Moula, managing director of Islami Bank Bangladesh Limited, told The Business Standard. 

"We have also started disbursing loans through agents. In the short time, we will also be at the top in loan disbursement." 

So far, 28 public and private banks have joined the agent banking service.

Of them, Bank Asia is at the forefront in launching agent outlets and opening accounts through agents, Islami Bank has surpassed everyone in collecting deposits and receiving remittances through agents and Brac Bank is at the forefront in disbursing loans through agents.

According to the data available with the Bangladesh Bank, the growth of agent banking in the country has surpassed the record.

At the end of June this year, the number of agents of the 28 banks has increased to 12,912.

As of June 2020, the number of bank accounts opened through agent banking was over 73.58 lakh and over 48.47 lakh new bank accounts have been opened in just one year.

At the end of June this year, the number of bank accounts opened through agents stood at over 1.22 crore.

In the one year, the deposit increased to Tk20,379 crore, from Tk10, 220 crores at the end of June last year. 

Besides, loan disbursements grew by over 342%. At the end of June this year, the amount of loans disbursed through agents has increased to Tk3,186 crore, from only Tk720 crore a year ago.

Selim RF Hussain, managing director at Brac Bank, told TBS, "Our bank is different from other banks. We invest heavily in the SME sector. Our goal is to collect deposits through general banking and disburse loans through agent banking to enrich the SME sector."

The biggest achievement of the country's economy in the ongoing pandemic is the big jump in remittance inflows. Until June this year, the growth of remittances has been more than 36% in the banking system.

Remittance growth in agent banking increased by 155% in one year. Till June 2020, the total remittance through agents in the country was Tk26,650 crore. But in just one year, the amount of remittances coming through agent banking has exceeded Tk67,954 crore.

On 9 December 2013, the Bangladesh Bank issued a policy on conducting agent banking activities. In January 2014, Bank Asia recruited its first agent as part of a pilot programme. Since then, other banks quickly joined agent banking.