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Loan disbursement through the banks’ agent banking wings increased by 525.07 per cent or Tk 770.8 crore year-on-year in the OctoberDecember period of 2020 as the system became a much more cost-efficient way of availing banking services compared with branch-based banking.
The latest Bangladesh Bank data showed that the banks disbursed Tk 917.6 crore in loans to the customers through the agent banking wings during the last quarter of 2020 against their disbursement of Tk 146.8 crore in the same period of 2019.
Of the disbursements made in the October-December period of 2020, the banks disbursed Tk 507.2 crore for the rural areas against their disbursements of Tk 410.4 crore for the urban areas.
In October-December of 2019, the banks’ loan disbursement for the rural and urban areas were Tk 88.9 crore and Tk 57.8 crore respectively.
Apart from loan disbursement, the agent banking wings have also emerged as a cost-efficient way of deposit mobilisation for the banks with the volume of deposit collection through agent banking increasing by 107.95 per cent or Tk 8,143.5 crore within a span of one year at the end of December 2020.
Deposit collection by the banks through agent banking reached Tk 15,687.1 crore at the end of December 2020 from Tk 7,543.6 crore a year ago.
Apart from deposit mobilisation and loan disbursement factors, the banks’ agent banking wings have been playing a vital role in bringing the unbanked population under the banking network at an affordable cost, BB officials said.
Meghna Bank managing director and chief executive officer Sohail RK Hussain told New Age, ‘The agent banking service was much effective during the pandemic when the banks were very busy with implementing the stimulus packages.’
Keeping the factors in consideration, Meghna Bank has filed an application with the central bank for permission to operate agent banking wings.
‘Banks use a number of distribution channels to reach to their customers and agent banking is another such type of distribution channel,’ said Sohail, adding that the cost involved in agent banking is far lower than opening a branch.
‘That is how agent banking allows banks to gain a foothold in areas where it is not viable for the banks to have a presence by opening a branch,’ he said.
Besides, a segment of people do not get effective services from the branches due to their low transaction volumes and agent banking plays a vital role in fulfilling the needs of these people, said Sohail.
Alongside gaining a foothold in rural areas through agent banking, the service allows the banks to strengthen their presence even in the urban areas, he said.
‘All in all, it’s a cost efficient way of expanding the banks’ foothold among the segment of people who usually are not comfortable in availing banking services through branches,’ the managing director said.
The number of transactions through agent banking increased by 48.28 per cent to 98 lakh year-on-year while the volume increased by 101.94 per cent to Tk 33,421.1 crore year-on-year in December 2020.
The number of customer accounts opened through the agent banking wings reached 96.46 lakh and the number of agents increased to 11,929 at the end of December 2020.
