Loan disbursement through the agent banking platform got a big push during the pandemic, in a massive boost to the Bangladesh Bank’s financial inclusion agenda.
At the end of September, loans amounting to about Tk1,087 crore was disbursed through the channel, up about 61.3 per cent from March, according to data from the BB.
With the view to taking banking services to the remotest corners of the country, the BB in 2013 issued the agent banking guidelines.
Agent banking offers limited banking and financial services to the underserved population by engaging representatives under a valid agency agreement.
It is the owner of an outlet who conducts banking transactions on behalf of a bank.
Agents provide services such as cash deposits, withdrawals, remittance disbursement, small value loan disbursement and recovery of loans, and cash payments under the government's social safety net programmes.
In 2016, lenders kickstarted their operations with just deposit mobilisation and gradually they added on more services. Now, 24 banks run agent banking windows.
Of them, nine lend through the channel, providing an alternative to loan sharks for rural people to get credit.
All indicators of agent banking including deposit collection, loan disbursement and remittance distribution are increasing day by day, said Md Anwarul Islam, general manager of the BB’s financial inclusion department.
“That means people especially rural people are benefiting from the services. This is why the channel is rapidly gaining in popularity.”
He went on to tip loan disbursement through the channel to soar once normalcy returns to the country.
BRAC Bank has ranked top with the largest volume of loan amounting Tk 553.75 crore, which is 50.94 per cent of the total loans disbursed through agent banking.
“Within one year we became the top lender through the agent banking channel,” said Selim FR Hussain, managing director of Brac Bank, which provided loans amounting to Tk 553.8 crore through its agents.
Brac Bank got its agent banking licence in November 2018 and now has 406 agent outlets across the country.
The agent outlets are playing a vital role in reaching the small and medium enterprises (SMEs), the bank’s main target group, for lending, Hussain added.
Brac bank has 400 SME units in the 406 agent banking outlets, which helped to increase lending through the channel, said Nazmur Rahim, its head of alternate banking channels.
Not everyone is having as good a run as Brac Bank in lending through the window.
“Agents are not that interested in lending,” said Md Arfan Ali, MD of Bank Asia, which disbursed Tk 299.8 crore through the platform.
Deposit collection through the agent banking window stood at Tk 13,040.6 crore at the end of September.
Bank Asia is lending about 25 per cent of the deposit collected through the window.
“We will increase it to 100 per cent by 2021,” he said, adding that the bank would disburse SME loans, agriculture loans and micro credit through agent banking in future.
City Bank’s 1,200 agents made it easier to disburse SME loans including government-announced stimulus packages to areas where there are no bank branches, said Kamrul Mehdi, its head of SME of City Bank.
The bank disbursed about Tk 200 crore through the channel.
Dutch-Bangla Bank MD Abul Kashem Md Shirin said the bank is trying to increase its lending through agent banking to boost the rural economy.
“We trained our agents on the banking terms and rules so that they can disburse loans. A well-trained agent can reduce default loans by boosting recovery as he is a well-known person in the area he got appointed as an agent,” Shirin added.