Success Stories and Role of Agent Banking in Serving Marginalized People

 

Through Agent Banking Service (ABS), the volume of services and transactions of marginalized people is constantly increasing and it is becoming popular day by day. Where private banks, including state-owned banks, are struggling to fight for provide services to their branches, the growth and success of ABS is worth seeing. Because banks do not have much cost in ABS and in that case the ABS has to bear all the costs. Agents get only bank fixed commission, that's why ABS is getting huge popularity among marginalized people. As on September 30, 2022, 31 Scheduled Banks have been authorized to carry out ABS activities. Specially ABS has the greatest impact on rural life and it is a golden platform for financial inclusion and a big foundation for building digital Bangladesh. Many banks still do not have branches in all remote areas of the country. People of these regions remain out of reach of banking services. People are being brought under banking services by opening agent bank outlets in those areas.

It is known that the concept of ABS originated in Brazil, a Latin American country and the banking concept quickly spread to Chile, Colombia, Peru and Mexico. It has also spread to poorer countries in Africa, including Kenya. The service has also been launched in neighboring India to bring under banking services to the doorsteps of people lagging behind in financial inclusion. To this end, Bangladesh Bank (BB) issued ABS policy on 9th December 2013 to launch ABS service and Bank Asia first launched the service in 2014. According to the policy of the Central Bank, through the appointment of agents by the Scheduled Bank, ABS program was introduced to create for providing cost-effective, safe and modern technology-based banking services to the people, to bring dynamism in economic activities, create employment, alleviate poverty and achieve a supportive environment for inclusive economic growth. Currently all banking activities are being done through agent bank except cash withdrawal through cheque.

According to the latest BB report, at the end of November 2022, the number of agents increased to 15,056 and against it there are 20,621 outlets, out of this, there are 17,778 outlets in villages and 2,843 in cities. Moreover, the number of customers of this service increased to 1,72,51,000 in November. In November 2021, the number of clients was 1,35,07,000 and the number of clients increased by about 37 lakh in a year and in March 2020, the number of customers was only 64.85 lakh. i.e., after the start of COVID-19, 1.08 lakh customers have increased, that means it got more clients in the last three years than it got between 2014 and 2019.

In November 2022, deposits in ABS increased to Tk. 29,658 crore, which was Tk. 7,543 crore in December 2019. Deposits in ABS increased by more than 300 percent in the last three years. However, against deposit collection, the bank's ABS has lagged behind in loan disbursement. In October 2022, a total of Tk. 674 crore was disbursed, which is Tk. 11 crore less than the previous month. The amount of loan disbursement in September was Tk. 685 crore, out of disbursed loans, Tk. 433 crore was disbursed in rural areas and Tk. 240 crore in urban areas.

ABS has also revolutionized remittance collection in the country and the amount of expatriate income through ABS has crossed the milestone of Tk. 1 lakh crore. Until September 2022, remittances through this new style of banking were Tk. 1,06,628 crores and about 96 percent of these came through the agents of five banks only. Islami Bank Bangladesh Limited alone collected 52 percent of remittances and till last September Tk. 55,537 crore remittances came through the agents of this bank. Analyzing the data of BB, it can be seen that in the last three years, most remittances have come through agents. At the end of 2019, the total amount of remittances through agents was only Tk 15,534 crore, which exceeded Tk 1,66,628 crore at the end of September last year. According to this, in less than three years, Tk. 91,094 crores have come through ABS. Although Islami Bank Bangladesh Ltd started ABS quite late compared to other banks, Islami Bank's position is at the top in terms of deposit collection and remittance collection.

The most significant thing is that this ABS does not require any large infrastructure to run and a valid contract is one of the conditions of this process. As a result, ABS is being started in some parts of the country in Union Parishad offices, drug pharmacies or small-scale shops. The matter is now so simple that the village people are taking bank services just like going to the shop to recharge their mobile phones. Although now ABS has been introduced in the city as well.

Through ABS, banking services are being provided easily and at low cost to underprivileged people. For example, a customer can easily pay the electricity bill through the nearest agent center by paying a very small amount of charge. Besides, we can easily pay the bills of other utility service providers, one can easily transfer money through banking channels and withdraw foreign remittances through BEFTN, RTGS and NPSB by paying minimal charges. The client does not have to spend extra money to go to the bank branch.

ABS service was launched in 2014 to serve the underprivileged with the aim of financial inclusion. Serving rural people is the main objective of ABS. A person who has his own sales organization in these areas where the bank does not have a branch can be an agent of the bank. There is a rule to provide this service without any additional charges. In order that the customer is not cheated in any way in ABS, before appointing a representative, the bank must ensure about his business experience, trustworthiness and honesty. Initially, ABS was allowed only in rural areas, but later BB allowed ABS in urban and municipal areas as well.

ABS has added a new dimension to enhance banking services. ABS is done for various classes of people, especially to provide banking services to schools, street children, visually impaired, third gender citizens, char areas and islanders. According to a research report of Bangladesh Institute of Bank Management (BIBM), ABS is becoming popular among small businessmen and remote areas.

ABS is providing any types services of banking service approved by the central bank. While all the costs of branch management are borne by the bank, all the responsibilities of ABS are borne by the agent. Agents provide the service on behalf of the bank through a certain commission. He has to bear the profit and loss at the end of the month except for the manpower salary, building rent and incidental expenses. However, ABS activities are considered by some less educated people of the village to be a branch of an NGO or a multi-purpose society. To avoid these misconceptions concerned banks should run advertisement or awareness activities in electronic and print media.

Bank branches are generally located in important commercial areas and urban areas. Many upazilas or district headquarters do not have branches of private banks. Now banking services are being provided in these areas also through ABS. As the rural people are getting banking services at their fingertips, new employment is also being created in the area. The biggest advantage of ABS is that collateral is relatively low. ABS operations can be conducted in a small area, manpower is also less. Because of this, ABS activities are expanding rapidly and are becoming more popular and success day by day among the marginalized people.

 
Md. Zillur Rahaman is a
banker and a columnist.