Agent Banking refers to providing
financial services to the underserved population through engaged agents who
conduct banking transactions on behalf of the bank. These agents or retailers
who are usually the owners of outlets, are increasingly becoming an important
distribution channel in reaching to the unbanked segment of the society in
addition to the existing customer with a wide array of financial services
specially to geographically dispersed locations. Agent Banking: Bridges the gap
between the bank and the unbanked people Makes banking services accessible to
rural people Offers cost-effective banking services Minimizes the operating and
establishment costs for banks.
Agent Banking
means providing limited scale banking and financial services to the underserved
population through engaged agents under a valid agency agreement, rather than a
teller/cashier. It is the owner of an outlet who conducts banking transactions
on behalf of a bank.
Need For The Launch Of Agent Banking
Over the
years, Agent Banking has proved to be very effective for developing countries
which lack access to formal financial services. Agent Banking has been a
revolutionary inclusion in the financial systems of Brazil, Columbia, Peru,
Malaysia and Kenya. In all the three countries, Agent Banking has been most
successful in easing payments made by different households particularly utility
bills, taxes etc. In remote areas, as data suggest, such payments account for
more than 70% of the total transactions.
In
Bangladesh, with more than 650 licensed Microfinance Institutions (MFIs)
operating with a client base of around 40 million in different regions, the
outreach of microfinance institutions is vast. While these MFIs have done a
great job by targeting the poverty-stricken segment and providing small-scale
financial services to these marginalized people, they have limitations as far
as the regulatory framework is concerned.
Understandably,
in some cases, it may not be financially feasible for a bank to open a
full-fledged branch. In such cases, the agent outlets can act as mirror bank
branches. The agents will provide banking services to the people on behalf of a
bank and the nearest branch of the bank will provide necessary logistic
support.
As a
result, the need for Agent Banking became more justified. If the vibrant
banking sector is properly guided by the Central Bank guidelines, Agent Banking
can ensure the access of the marginalized people to several financial services
in remote areas. It can work wonders in ensuring financial inclusion and
materializing the dream of a poverty-free Bangladesh.
.1 The
following services will be covered under Agent Banking:
I.
Collection of small value cash deposits and cash withdrawals (ceiling should be
determined by BB from time to time );
II.
Inward foreign remittance disbursement;
III.
Facilitating small value loan disbursement and recovery of loans,
installments;
IV. Facilitating
utility bill payment ;
V. Cash
payment under social safety net programme of the Government ;
VI.
Facilitating fund transfer(ceiling should be determined by BB from time to
time);
VII.
Balance inquiry; Guidelines on Agent Banking for the banks - 2 -
VIII.
Collection and processing of forms/documents in relation to account opening,
loan application, credit and debit card application from public;,
IX. Post
sanction monitoring of loans and advances and follow up of loan recovery. X.
Receiving of clearing cheque. XI. Other functions like collection of insurance
premium including micro‐ insurance
etc
Services Offered through Agent Banking:
• Collection and processing of documents in relation to account opening
• Cash deposit and withdrawal
• Savings products
• Fund transfer between accounts & Cheque deposits
• Inward foreign remittance
• Loan application, credit and debit card application form collection and processing
• Small value loan disbursement and collection
• Utility bill payments, Bulk disbursements & Account balance inquiries
Challenges:
i. Selection and monitoring of agents
ii. Cheque book issue and clearing cheque
iii. Limited transaction time
iv. Power failure
v. Cash carrying or Management risk
vi. Physical and cyber security
vii. Settlement of complaints
Benefits of Agency banking
Agent-based operations
Agency Banking operates with the help of agents who conduct transactions on behalf of the unbanked. Banking agents can have a digital wallet or stored value account on an online platform, and this platform can apply the set business rules to the transactions started by the agents. Bank customers can have their accounts on a digital wallet or the core banking system. Agents can carry out transactions on such accounts on customer’s behalf. The business rules will be applied by the host system to the accounts of customers.
Easy platform
An Agency Banking platform lets agents put in, and withdraw money from their digital wallets with various business rules. The service can be used by agents for fund transfer between stored value accounts, or to the bank account of customers from their stored value account. Agent banking delivers financial services to the underserved and unbanked populations, employing the use of mobile phones, POS (point-of–sale) terminal, card readers and other technology for processing of real time transactions.
Support for various transactions
It supports various types of transactions, such as voucher-less prepaid top-up, top-up prepaid voucher sale, loan repayments, account balance queries, merchant’s services, cash withdrawals, cash deposits, transfers and bill payments of various types, such as fines, taxes, government fees, utility bills and more.
Improved security
Bank customers can be issued a bank pin and a magnetic chip card or stripe, and use this pin, which is readable by the agent’s terminal, and card for carrying out transactions. Customers can get more security when compared to cash management. For agents, the primary advantage is to drive more customers through their business or shop.