Aims to bring unbanked, underprivileged people under banking network
Zafor Iqbal, a businessman of Bagha upazila in Rajshahi, now does not have to travel 25 kilometres to get banking services as NRBC Bank has established a sub-branch at his upazila.
“We are very happy that the sub-branch saves our time and money. Before the sub-branch was established, we would need to go to Baneshwar union for banking transaction, which is 25 kilometres away from Bagha,” said Zafor, proprietor of M/S Bismillah Enterprise.
Abdur Rahim, a businessman in garments sector, pays all his utility bills and makes other transactions through the 60-Feet Road sub-branch of Islami Bank Bangladesh in the capital.
The sub-branch is near his business place and spares him a lot of hassles because of this proximity.
Many people like them are now doing their banking via sub-branches, which have opened up a new horizon of banking, taking the services to the doorsteps of people.
As of December 31 last year, twenty-eight banks have got permission from the Bangladesh Bank to open sub-branch and of them 22 banks have already opened sub-branch services in rural and industrial areas.
Now, a total of 393 sub-branches are catering services to their clients across the country, according to the central bank data.
The new banking system was aimed at bringing unbanked and underprivileged people under the banking network, Abu Farah Md Naser, executive director of Bangladesh Bank, told Dhaka Tribune.
NRB Commercial Bank has the highest 147 sub-branches in operation in the country.
So far, the bank collected about Tk300croer as deposits from the sub-branches while they disbursed loans to the tune of around Tk22 crore, according to financial inclusion and ADC division of the bank.
Talking to Dhaka Tribune, Kazi Md Safayet Kabir, executive vice president and head of financial inclusion and ADC division of the bank, said: “We pioneered sub-branch banking after we got the permission in August of 2018.”
He said that the bank opened sub-branches in rural and industrial areas through agreements with the Bangladesh Road Transport Authority (BRTA) and land registration offices.
"We want to take the banking services to the rural people and garments workers through sub-branches," Kazi Md Safayet Kabir stated.
“Besides, sub-branch banking can address the bank’s liquidity crisis by generating liquidity at the roots level. Now NRBC Bank has no liquidity crisis,” he added.
According to Bangladesh Bank data, IFIC Bank has 70 sub-branches in operation while IBBL has 24, Jamuna Bank 22, SIBL 21, SBAC 19, NBL 14, UCBL 12, SEBL 11, One Bank 9, Dhaka Bank 8, and Premier Bank has 7 sub-branches in operation.
In December 2018, the central bank allowed banks to operate “banking booth or sub-branch” with a view to bringing unbanked and underprivileged people under the banking network.
Before the move, the central bank made a policy regarding setting up of a sub-branch. Bangladesh Bank executive director Abu Farah Md Naser was involved in the process.
He mentioned that most of the banks were setting up their branches in major cities, including Dhaka and Chittagong.
“They are not interested to open a branch in rural areas. Although remote areas now have agent banking, all banking services cannot be provided through the system. So the policy of setting up “sub-branch” was made,” Abu Farah Md Naser said.
“Through the sub-branch, industry workers can deposit their money and take loans,” he added.
Main features of sub-branch banking
According to the sub-branch banking policy, at least two officers will be appointed at a sub-branch, having not more than 1,000 square feet.
Fees, charges and commission of banking services will be less here if compared to branches.
Transactions at the sub-branch will be carried out on a real time basis and customers will get instant SMS and printed slip against their transactions.
The sub-branch, however, will not be allowed to carry out any sort of foreign transaction, according to the policy.
To set up a sub-branch, the banks must submit application to the central bank along with decision of its board of directors.
The central bank, however, preserves the rights to close any such sub-branch without giving prior notice.
According to the policy, the sub-branch will now also be treated as business development centres of the banks.
Such branch will be regulated under the central bank’s rules and regulations for providing limited scale services and will be operated within a limited expenditure under the supervision of a nearby full-fledged branch of a bank.
Talking to Dhaka Tribune, Bank Asia President and Managing Director Md Arfan Ali said that banking via sub-branch was a new horizon after agent banking.
“Except foreign trade, Bank Asia is providing all types of banking services including transfer of wages, loans disbursement, savings, remittance earning and transfer of money anywhere in the country through the sub-branch,” said Arfan Ali.
Apart from the garment factory, if there were five thousand employees in an organization, Bank Asia would set up a sub-branch in the organization, he said.
NRBC Bank’s Donia sub-branch manager Md Abu Sayem Khan said every day seven to eight people open a bank account with his sub-branch.
In the last seven months, 567 bank accounts were opened, he added.