Lending through agent banking jumps 122%

Loan disbursement through agent banking services has seen a massive jump of 122.16 per cent to Tk 8,881 crore year-over-year (YOY) in the July-September quarter of the current fiscal year, according to a central bank report on Monday.

The report titled  “Quarterly Report on Agent Banking (July-September 2022)”, also stated that remittance inflow through agent banking increased 42.5 per cent to Tk 1,06,628 crore as of September year-over-year.

However, although the amount of disbursed loans has increased compared to last year, the amount of deposits made using agent banking in the quarter is lower than the lending amount, said the report prepared by the Financial Inclusion Department of Bangladesh Bank.

“The volume of lending through agent banking is significantly low compared to the volume of deposit as the loan to deposit ratio stood at 27.22 per cent by the end of the reporting quarter”, stated the report. The deposit amount of agent banking stood at Tk 30,663 crore in the reporting quarter, a jump of 37.74 per cent year-on-year.   

According to the report, the slump in lending is a result of banks not having feasible infrastructures to lend and recover credits through agent outlets.

Analysts say that as lending rates grow, people in rural areas will get more credit facilities than before, which will strengthen the rural economy.

“In the current economic situation it is needed to increase vibrancy in the rural economy, which helps us with more production”, said Prof Muhammad Mahboob Ali, Dhaka School of Economics, University of Dhaka.   

Remittance inflow

The amount of inward remittances distributed by bank agent outlets has increased by 9.87 per cent in the first quarter of the ongoing fiscal year compared to the previous quarter. Meanwhile, the deposit amount rose by 42.5 per cent in the July-September period year-on-year.

The central bank in its report said customer interest in making deposits using agent banking is increasing as the service is now available near their homes. Besides, banks are also putting efforts to popularise the service.

“This remarkable increase of remittances channelled through agent banking seems to be a positive outcome of quick delivery of remittances to the doorsteps of the beneficiaries through agent banking.”

Growing female participation

Agent banking is also increasing participation of women in the formal financial sector.

The report highlighted that during the reporting quarter, the share of female accounts opened through agent banking increased by 3.25 per cent compared to the April-June quarter of the last fiscal year.

“This, in turn, signifies the increased participation of females in the formal financial system.”

Increased agent banking demand

Signalling a growing interest in agent banking, more and more banks are onboarding the service.

The number of banks providing agent banking facilities stood at 31 as of September, which was 29 in the same period last year.

The number of agents also increased to 8.86 per cent to 14,299 year-on-year in the July-September quarter while the number of outlets increased 11.62 per cent to 20,177 and number of accounts increased 29.97 per cent to 1,67,80,576.

Agent banking operation is excelling in rural areas with 1,44,71,090 accounts as of September, making up the 80 per cent of the total accounts opened using the facility.