Agent banking has emerged as a crucial formal channel of financial transactions in rural areas, reaching a large unbanked population and contributing significantly to both deposits and lending, according to a latest Bangladesh Bank report.
Deposits with the rural agent banking units stood at Tk 326.03 billion, 81.36 per cent of the overall deposits of Tk 400.73 billion by the end of June 2024, BB data shows.
Deposit growth surged by nearly 20 per cent year-on-year in June 2024.
During the same period, rural customers borrowed Tk 121.28 billion, nearly 65 per cent of the total loans of Tk 187.42 billion disbursed through the agent banking channel.
The transaction data aligns with the agent banking core objective of improving the access to financial services of the rural population and financial inclusion.
The number of rural accounts grew by 15.48 per cent to 19.83 million by the end of June 2024 from a year ago, as per the agent banking data.
However, lending has been dominated by male borrowers, who received more than 80 per cent of the total loans disbursed.
In its latest quarterly report on agent banking, Bangladesh Bank has highlighted the significant potential to identify and support more female entrepreneurs in rural areas by improving their access to finance through the agent banking channels.
It stated: "Bangladesh Bank is closely monitoring the issue of female loan distribution and is continually encouraging banks to facilitate loans for female customers through agent banking."
Currently, only 23 of the 31 banks with agent banking licences are providing lending services.
An official overseeing the agent banking services told The Financial Express that the primary reason for the rapid expansion in rural areas is the proximity to the agent banking units.
"An outlet is now available within a radius of 2-3 kilometres in most rural areas," he added.
The official also noted that lending rates are favourable compared to that of microfinance institutions and NGOs.
"Our lending rates cannot exceed the core banking rates, which are currently around 14 per cent, compared to over 20 per cent charged by NGOs," said the head of agent banking at a privately-owned commercial bank, who requested anonymity.
As of June 2024, Bangladesh has 31 banks licenced for agent banking. The number of agents stood at 15,991, with the total number of agent banking outlets reaching 21,478 and accounts 23 million.
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