'BRAC Bank's Agent Banking empowers rural communities'

Question (Q). Why Agent Banking Channel is important for BRAC Bank?

Answer (A): Agent banking channels play a crucial role in providing banking services to the country's unbanked and underserved populations. While these individuals may have limited exposure to traditional banking, their financial needs cannot be overlooked. Many belong to segments such as CMSME, remittance receivers, agricultural loan beneficiaries, and retail customers with transactional requirements. However, they often hesitate to visit bank branches, perceiving them as too formal or intimidating. This gap is effectively bridged by Agents from their local communities, who offer convenient banking services.

Q: What is the socioeconomic impact of agent banking making in Bangladesh especially in rural parts?

A: According to the Bangladesh Bank Quarterly Report on Agent Banking (September 2024), the number of accounts opened through agent banking has reached 2.34 crore, with 50% of these accounts belonging to female customers. Of the total accounts, 2.02 crore are held by customers in rural a-qreas.

As of September 2024, the total deposits accumulated in agent banking accounts amounted to BDT 39529 crore. Additionally, 23 banks disbursed loans through agent banking, reaching BDT 21090 crore. Furthermore, the cumulative amount of inward remittances disbursed through agents stood at an impressive volume of BDT 165659 crore. Notably, these contributions were facilitated exclusively through the agent banking channel.

Such remarkable growth highlights the significant role of agent banking in the socio-economic development of rural communities. Agent banking has reached previously underserved groups, including remittance beneficiaries, small businesses, farmers, and the broader rural population by providing access to financial services.

Q: How is BRAC Bank's agent banking channel different from other banks?

A: BRAC Bank's approach to agent banking stands out due to its unique focus on three core areas: Agent Selection and Training, Service Inclusion through Technology and Focus on Security and Sustainability.

BRAC Bank prioritizes selecting the right agents, considering them as the cornerstone of the channel's success. These agents undergo rigorous and continuous training to ensure adherence to the rules and regulations set by Bangladesh Bank and BRAC Bank. This ensures that the agents operate with integrity and efficiency.

Leveraging advanced technology, the bank streamlines processes to include as many services as possible within its agent banking ecosystem. This empowers agents to address a broad range of banking needs, particularly for underserved and unbanked rural populations, thus enhancing financial inclusion.

BRAC Bank ensures that customers' deposits are secure while supporting agents to achieve long-term sustainability. This handholding approach enables agents to deliver superior customer experiences, expand service coverage, and contribute positively to the socio-economic development of rural areas.

This holistic strategy sets BRAC Bank apart and plays a pivotal role in improving rural banking accessibility and fostering economic growth.

Q: What notable progress have you made on financial inclusion, financial literacy and women empowerment through agent banking?

A: BRAC Bank agent banking is committed to promoting financial inclusion by reaching those who need banking services the most. Over 80% of its Agent Banking Outlets are in rural areas, ensuring accessibility for underserved communities. From the beginning, BRAC Bank has offered loan disbursement and repayment services through agent banking, accounting for over 65% of all loans disbursed via such channels.

Remittance disbursement is another key service, with a significant number of female customers who previously avoided formal banking channels now participating. BRAC Bank has conducted 175 "UthanBoithok" (Courtyard Meetings) to enhance financial literacy at customer premises. The bank's efforts in empowering women were recognized with a Bill & Melinda Gates Foundation grant.

In addition to on boarding female customers, 87 of BRAC Bank's Agents are women, promoting gender inclusivity in the financial sector. The bank ensures that at least one staff member at every Agent Banking Outlet is female, fostering employment opportunities for women and encouraging female customers to access banking services.

Q: Can you elaborate on achievements in deposit & assets mobilization, SME loan disbursement, and remittance delivery through the channel?

A: As of September 2024, BRAC Bank has launched 1,108 agent banking outlets across all 64 districts and 89% of upazilas. This network serves over 350,000 customers with 472,690 active accounts. Our deposit portfolio totals BDT 1825 crore, while loan disbursements through the channel amount to BDT 13,789crore, with repayments of BDT 20926crore. Inward remittance delivered via this channel is BDT 30550 crore, surpassing the bank's branch channels.

Q: How is technology helping advance Agent Banking further? What is your future expansion plan on Agent Banking?

A: Technology is a key pillar in Agent Banking, enabling the delivery of banking services to remote areas. To ensure ease and security, we operate through an Agent Banking System (ABS), which is simpler and safer than the traditional Core Banking System (CBS). Since agents may have limited banking knowledge, we incorporate biometric authentication for transactions, ensuring safety. Additionally, we utilize TIPIN and regular monitoring to prevent unauthorized activities at agent outlets.

The goal of Agent Banking is to strengthen the rural economy. BRAC Bank plans to expand services to every corner of the country, offering a wide range of banking solutions. Agent banking is particularly effective for distributing micro-loans to individuals and SMEs and can support various institutional accounts, bill payments, and partnerships with NGOs, MFIs, and insurance firms. With the full implementation of Bangladesh Bank's Binimoy system, agent banking will become even more efficient and capable, enabling more services as agents' capacities increase.