, Bangladesh
415 views

Agent Banking's impact on financial inclusion in Bangladesh

By Md. Touhidul Alam Khan

Agent banking has a transformative role in bridging the financial inclusion gap in Bangladesh.

Bangladesh's financial inclusion narrative has undergone a seismic shift, evidenced by the substantial disparity between rural and urban deposit accounts. This article explores the transformative role of agent banking in bridging the financial inclusion gap and its socio-economic implications.

Agent Banking:
Agent banking, a catalyst for change introduced formally in 2013, has seen 31 banks spearhead this initiative, reaching union levels and providing financial services to rural and underprivileged individuals. This innovative approach encourages participation, especially among women.

Statistical Overview:
As of November 2023, Bangladesh boasts 15,581 agents and 21,506 outlets, with rural agents surpassing urban counterparts. The cumulative number of accounts reached 21.20 million, with a deposit balance of Tk 351.69 billion. Notably, remittance inflow through agent banking reached Tk 21.24 billion in November, showcasing its crucial role in facilitating cross-border financial transactions.

Loan Disbursement Dynamics:
Bangladesh Bank data highlights a significant urban-rural divide in outstanding loans, disbursement, and recovery. With the outstanding balance in November at Tk. 83.87 billion, disbursement in rural areas is more than twice that in urban areas. Agent banking efficiently caters to the unique financial needs of the economically disadvantaged, particularly in microcredit loans.

Sector-wise Analysis:
Private banks lead in the number of agents and outlets, holding 70% of total agents, followed by Islamic banks with 25%, and state-owned banks with 5%. In terms of outlets, private commercial banks dominate with 77%, Islamic banks with 19%, and state-owned banks with 4%.

Financial Impact and Future Prospects:
Agent banking has positively impacted deposit collection, remittance inflow, and loan disbursement, particularly in rural areas. Its growth over the past decade underscores its potential to transform the economic landscape for underserved communities, aligning with the need for cost-effective approaches in providing accessible and secure formal financing for agriculture and rural SMEs.

The Role of Agents:
The agent banking model ensures real-time banking for customers, equivalent to services at the main branch. Biometric devices enhance security, mandating fingerprint verification for transactions. Eligible agents include NGOs, cooperative societies, postal offices, mobile network operators, and other entities approved by the Bangladesh Bank.

Conclusion:
Agent banking stands as a pivotal solution for extending financial services to the unbanked and under-banked population in Bangladesh. This paper highlights significant strides, emphasizing the need for continued collaboration between banks and regulatory authorities to sustain and expand the success of agent banking. The unique approach of agent banking holds promise in fostering economic growth and development in underserved communities, serving as a beacon of financial inclusion in Bangladesh's evolving landscape.


Md. Touhidul Alam Khan is the managing director and chief executive officer of National Bank Limited, Bangladesh.
 

Pembekuan pendanaan menghantam penyedia layanan BNPL

Investor semakin sedikit mengalirkan dana ke penyedia layanan BNPL yang sudah menghadapi keuntungan margin yang tipis.

HSBC: Aliansi bank-fintech merupakan win-win

Pemberi pinjaman dapat belajar dari teknologi disruptif sambil membantu mereka mematuhi regulasi.

Tokenisasi aset perdagangan untuk menjembatani kesenjangan pembiayaan

Teknologi blockchain dapat mendesentralisasikan operasi keuangan dan mempermudah akses kredit.

BCA menjalankan komitmen terhadap keuangan berkelanjutan

Bank asal Indonesia ini mempertimbangkan aspek lingkungan dan tata kelola dalam keputusan pemberian pinjaman.

Mengapa UNOBank mendorong embedded finance tumbuh di Filipina

Bagi UNOBank, banking interface terpadu adalah strategi pertumbuhan sekaligus upaya inklusi keuangan.

OCBC mencoba mengurangi kesenjangan manfaat bagi agen properti di Singapura

Produk terbarunya menawarkan manfaat finansial di bidang perbankan, asuransi, dan perdagangan.

Upaya Malaysia menjadi anggota BRICS untuk mendorong perombakan sistem perbankan

Namun, tantangan muncul ketika menjauh dari ketergantungan pada AS dan SWIFT.

Platform pembayaran PingPong memperoleh lisensi PJP di Indonesia

PingPong mengincar ekspansi ke pasar ekspor senilai $320 miliar di negara tersebut.

Merger dan penutupan mengancam 3.800 bank di area pedesaan Cina

Sekitar 70 bank di area tersebut telah merger sejak 2023.