Agent banking drives rural financial inclusion

Agent banking transactions continue to dominate rural Bangladesh, driven by the easy access to the system by village residents, according to sources with direct knowledge of the matter.
As of June 2024, rural transactions accounted for an impressive 84.23 per cent of the total agent banking volume, with total transactions amounting to over Tk 485 billion, according to an agent banking quarterly report released on Thursday.
By contrast, urban agent banking transactions, where full-fledged bank branches are also available, represent just over 15 per cent of the total, said the quarterly prepared by Bangladesh Bank, the central bank.
This stark disparity indicates that rural agent banking transaction volumes are approximately 5.34 times higher than those in urban areas.
Of the Tk 485 billion total transactions, cash deposits hold the biggest share at 46.33 per cent, underscoring a heavy reliance on this system for mibilising savings and managing funds.
Cash withdrawals follow, comprising 30.54 per cent of the total, reflecting strong demand for immediate liquidity from rural consumers and businesses.
Inward remittances, a crucial income source for many rural households, account for 6.89 per cent of transactions, underscoring their importance in spurring local economies.
On the other hand, fund transfers represent 10.48 per cent, signalling a gradual shift toward electronic transactions.
Utility bill payments, however, remain relatively low at 0.28 per cent, suggesting this system is less favoured for routine expenses.
Industry sources told FE that deposit growth was being driven by the accessibility of banking services close to rural residents' homes.
The steady growth in agent banking deposits reflected rising participation of rural residents, advancing financial inclusion, said a senior official working with the privately-owned commercial bank -- Mercantile Bank PLC.
He said people were getting easy access to the banking services just outside their homes leading to rise in the volume of transactions.
As of June 2024, the total deposits through agent banking reached Tk 398.136 billion, marking a 22.34 per cent increase year-on-year, according to the quarterly agent banking report.
The total number of deposit accounts associated with agent banking also saw a notable rise, increasing by 16.24 per cent year-on-year to reach 23,032,015 as of June 2024.
Women's participation in agent banking was growing significantly.
Women's deposit accounts increased by 16.58 per cent compared to June 2023, and women's loan accounts grew by 17.31 per cent year-on-year.

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