Md. Zillur Rahaman :
When the banking sector is turmoiled over the issue of dealing with the non-performing loans, then Agent Banking Service (ABS) has made significant contribution to rural economy over the past few years and it is becoming increasingly popular in the grassroot areas across the country.
People are getting remittances from abroad and they can now pay their utility bills through this channel uninterruptedly. Some youth are finding new opportunities of employment in agents. Agents also are deploying additional workforce for its day to day smooth operations.
Availability of mobile phones and internet facilities in rural areas has made it easier for ABS.
Banks in the country are now focusing on ABS for its popularity among people, especially in remote areas. Banking experts say agent banking offers several services such as inward remittance, money transfers, different deposit schemes, and payment of utility service bills.
Basically ABS is providing all sorts of banking services except encashment of cheque by the client and strictly dealing of foreign currency. However, recently some banks are providing Points of Sale (POS) machine in the ABS to withdraw the money instead of cheque. Biometric digital finger print is the key point of security of the ABS and it is very essential for withdrawal of money. ABS account holders can easily accept the ATM/VISA card to use in the ATM booth in convenient places and they can also use the same for various payments against purchasing goods and services where the POS is available.
ABS is becoming more reliable among rural people. Private banks are trying to make a foray into areas where no formal banking services are available. Clients are allowed to have deposits and withdraw cash through the outlets operated by agents without visiting a bank branch. Nowadays, many services are available at rural level, whereas people had to go to towns, earlier, for these purposes.
Although the Bangladesh Bank (BB) issued an ABS guideline in 2013, the first bank started its full-fledged agent operations in 2016. ABS service is becoming more popular day by day to the clients in remote area in terms of less costing way after its inception.
Needless to say that ABS service is a limited scale banking and financial service for those living in remote areas across the country through any person under a valid agency agreement, rather than a teller or cashier, according to BB agent banking guideline 2013. It is as like a dealership or distribution business and all maintenance cost will be incurred by the ABS, whereas branch banking is involved a huge cost and expenditures.
An agent is a third party owner of an ABS who conducts banking transactions such as cash deposits, withdrawals, small value loan disbursement and recovery of loans, transfer of funds, paying of utility bills under the government’s social safety net programs, and account inquiries on behalf of a bank
According to the latest data of BB at the end of 2019, deposit collection through agent banking was Tk 7,543.60 crore at the end of 2019, which was Tk 3,014 crore in 2018 and the number of accounts with agents increased to 52, 57,769 at the end of 2019 from 24,55,475 in 2018 i.e. the number of agent banking accounts across the country has doubled at the end of 2019 from 2018 as banks are gradually expanding their agent banking activities.
Besides, during the year 2019, the number of agents increased to 7,914 from 5,101 in 2018 and the number of bank agent outlets also increased to 11,319 from 6,932 in the same period. Among the deposit, Tk 2,085.80 crore was collected in the urban area while Tk 5,457.80 crore collected at rural area.
The purpose of introducing ABS is to provide a safe and secured alternative delivery channel for banking services to the under-privileged, under-served population, who generally live in a geographically remote location and beyond the reach of the traditional banking network.
Central bank officials said that the deposit growth in the agent banking accounts was mainly because of expansion of the service in the grassroot rural areas where people are deprived of banking service.
The central bank launched agent banking in 2013 by giving license to Bank Asia. A total of 21 commercial banks have already taken licenses from Bangladesh Bank while 19 banks are running their activities across the country.
The commercial 19 banks, which are currently running agent banking activities, are Dutch Bangla Bank, Bank Asia, Al-Arafah Islami Bank, Social Islami Bank, Modhumoti Bank, Mutual Trust Bank, NRB Commercial Bank, Standard Bank, Agrani Bank, First Security Islami Bank, Mid Land Bank, The City Bank, Islami Bank Bangladesh Limited, The Premier Bank, United Commercial Bank Ltd, AB Bank, NRB Bank, Brac Bank and Eastern Bank.
As per the central bank’s provisions, it is expected that the ABS will provide the maximum number of services to the clients. Therefore, they should not limit themselves only to facilitating account access to customers or transferring money.
Within just four years of its formal inception in 2016, ABS has been able to attract a huge number of clients, forcing most commercial banks to take up this alternative form of financial service in addition to branch-based banking.
BB introduced ABS a few years ago to reach the banking services to the doorstep of the grassroots level. BB also introduced mobile banking services in 2013 but the transaction of the mobile banking service is limited scale and most of the banking services are not available there.
Agent banking has been able to get such popularity mainly for its simplicity to the clients and cost-effectiveness for the banks.
According to a research paper titled, “Alternative delivery channel: Opportunities and challenges of the new banking environment” by Bangladesh Institute of Bank Management (BIBM), agent banking has become popular because of its benefits for both the banks and clients, while the country’s economy is also being benefited through financial inclusion.
According to the paper, the banks have been able to increase customer volume, improve financial appearance, lower operating costs, expansion of business, increase deposit collection, improve banks’ branding and widen their spreads.
According to a study of BIBM, 3 percent of the clients of agent banking are day labourers 29 percent clients are businessmen at small level, 7 percent are farmers, and 18 percent are housewives.
ABS has facilitated customers by providing full-fledged banking services at their doorsteps in the grassroot’s remote area, and it has made convenient and easy way for channeling remittance.
The ABSs are now not only limited to services like cash deposits, cash withdrawal remittance payment only, the banks have started giving out small loans through the outlets.
Six banks-DBBL, Bank Asia, Al-Arafah Islami Bank, Modhumoti Bank, Mutual Trust Bank and The City Bank- have already provided credit facility among its customers including the highest loan disbursement by Bank Asia. Others banks are also in the pipeline to disburse loans within short time.
ABS is much better than mobile banking services but presently most of the unbanked peoples are confused about agent banking and some of them consider it as like some NGO or multipurpose co-operative society working in grassroots level. ABS is a new concept in banking industry but have a big challenge and also a high potentiality.
BB as well as the relevant functioning banks should have a plan to popularise the ABS through circulating lucrative and eye-catching advertisement in print, electronic and social media and take the chance of rapid growth of the services in the grassroot remote areas.
When the banking sector is turmoiled over the issue of dealing with the non-performing loans, then Agent Banking Service (ABS) has made significant contribution to rural economy over the past few years and it is becoming increasingly popular in the grassroot areas across the country.
People are getting remittances from abroad and they can now pay their utility bills through this channel uninterruptedly. Some youth are finding new opportunities of employment in agents. Agents also are deploying additional workforce for its day to day smooth operations.
Availability of mobile phones and internet facilities in rural areas has made it easier for ABS.
Banks in the country are now focusing on ABS for its popularity among people, especially in remote areas. Banking experts say agent banking offers several services such as inward remittance, money transfers, different deposit schemes, and payment of utility service bills.
Basically ABS is providing all sorts of banking services except encashment of cheque by the client and strictly dealing of foreign currency. However, recently some banks are providing Points of Sale (POS) machine in the ABS to withdraw the money instead of cheque. Biometric digital finger print is the key point of security of the ABS and it is very essential for withdrawal of money. ABS account holders can easily accept the ATM/VISA card to use in the ATM booth in convenient places and they can also use the same for various payments against purchasing goods and services where the POS is available.
ABS is becoming more reliable among rural people. Private banks are trying to make a foray into areas where no formal banking services are available. Clients are allowed to have deposits and withdraw cash through the outlets operated by agents without visiting a bank branch. Nowadays, many services are available at rural level, whereas people had to go to towns, earlier, for these purposes.
Although the Bangladesh Bank (BB) issued an ABS guideline in 2013, the first bank started its full-fledged agent operations in 2016. ABS service is becoming more popular day by day to the clients in remote area in terms of less costing way after its inception.
Needless to say that ABS service is a limited scale banking and financial service for those living in remote areas across the country through any person under a valid agency agreement, rather than a teller or cashier, according to BB agent banking guideline 2013. It is as like a dealership or distribution business and all maintenance cost will be incurred by the ABS, whereas branch banking is involved a huge cost and expenditures.
An agent is a third party owner of an ABS who conducts banking transactions such as cash deposits, withdrawals, small value loan disbursement and recovery of loans, transfer of funds, paying of utility bills under the government’s social safety net programs, and account inquiries on behalf of a bank
According to the latest data of BB at the end of 2019, deposit collection through agent banking was Tk 7,543.60 crore at the end of 2019, which was Tk 3,014 crore in 2018 and the number of accounts with agents increased to 52, 57,769 at the end of 2019 from 24,55,475 in 2018 i.e. the number of agent banking accounts across the country has doubled at the end of 2019 from 2018 as banks are gradually expanding their agent banking activities.
Besides, during the year 2019, the number of agents increased to 7,914 from 5,101 in 2018 and the number of bank agent outlets also increased to 11,319 from 6,932 in the same period. Among the deposit, Tk 2,085.80 crore was collected in the urban area while Tk 5,457.80 crore collected at rural area.
The purpose of introducing ABS is to provide a safe and secured alternative delivery channel for banking services to the under-privileged, under-served population, who generally live in a geographically remote location and beyond the reach of the traditional banking network.
Central bank officials said that the deposit growth in the agent banking accounts was mainly because of expansion of the service in the grassroot rural areas where people are deprived of banking service.
The central bank launched agent banking in 2013 by giving license to Bank Asia. A total of 21 commercial banks have already taken licenses from Bangladesh Bank while 19 banks are running their activities across the country.
The commercial 19 banks, which are currently running agent banking activities, are Dutch Bangla Bank, Bank Asia, Al-Arafah Islami Bank, Social Islami Bank, Modhumoti Bank, Mutual Trust Bank, NRB Commercial Bank, Standard Bank, Agrani Bank, First Security Islami Bank, Mid Land Bank, The City Bank, Islami Bank Bangladesh Limited, The Premier Bank, United Commercial Bank Ltd, AB Bank, NRB Bank, Brac Bank and Eastern Bank.
As per the central bank’s provisions, it is expected that the ABS will provide the maximum number of services to the clients. Therefore, they should not limit themselves only to facilitating account access to customers or transferring money.
Within just four years of its formal inception in 2016, ABS has been able to attract a huge number of clients, forcing most commercial banks to take up this alternative form of financial service in addition to branch-based banking.
BB introduced ABS a few years ago to reach the banking services to the doorstep of the grassroots level. BB also introduced mobile banking services in 2013 but the transaction of the mobile banking service is limited scale and most of the banking services are not available there.
Agent banking has been able to get such popularity mainly for its simplicity to the clients and cost-effectiveness for the banks.
According to a research paper titled, “Alternative delivery channel: Opportunities and challenges of the new banking environment” by Bangladesh Institute of Bank Management (BIBM), agent banking has become popular because of its benefits for both the banks and clients, while the country’s economy is also being benefited through financial inclusion.
According to the paper, the banks have been able to increase customer volume, improve financial appearance, lower operating costs, expansion of business, increase deposit collection, improve banks’ branding and widen their spreads.
According to a study of BIBM, 3 percent of the clients of agent banking are day labourers 29 percent clients are businessmen at small level, 7 percent are farmers, and 18 percent are housewives.
ABS has facilitated customers by providing full-fledged banking services at their doorsteps in the grassroot’s remote area, and it has made convenient and easy way for channeling remittance.
The ABSs are now not only limited to services like cash deposits, cash withdrawal remittance payment only, the banks have started giving out small loans through the outlets.
Six banks-DBBL, Bank Asia, Al-Arafah Islami Bank, Modhumoti Bank, Mutual Trust Bank and The City Bank- have already provided credit facility among its customers including the highest loan disbursement by Bank Asia. Others banks are also in the pipeline to disburse loans within short time.
ABS is much better than mobile banking services but presently most of the unbanked peoples are confused about agent banking and some of them consider it as like some NGO or multipurpose co-operative society working in grassroots level. ABS is a new concept in banking industry but have a big challenge and also a high potentiality.
BB as well as the relevant functioning banks should have a plan to popularise the ABS through circulating lucrative and eye-catching advertisement in print, electronic and social media and take the chance of rapid growth of the services in the grassroot remote areas.
(Md. Zillur Rahaman, Banker and freelance writer, Satish Sarker Road, Gandaria, Dhaka.’ Email: [email protected])
