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Silent revolution in rural savings

Talukder Farhad
05 Mar 2023 09:18:13 | Update: 05 Mar 2023 09:39:36
Silent revolution in rural savings

The rural economy is diversifying along with the country’s economic progress. Increased electricity connection and improved road transportation facility have totally changed the socio-economic conditions of the villages, creating opportunities for numerous non-farm activities which ultimately are increasing the earnings of rural people.

And this increase in earnings has changed the mindset of rural people who are now realising the importance of savings.

But, there is hardly any way to ensure the safety of their savings. Despite the risk of losing, many rural savers lend their savings on monthly or annual basis, hoping to get better returns.

But, in most of the cases, it ultimately leads to disaster, creating an undesirable situation when the lenders try to recover the loans.

In many cases even the principal amount is not refunded and the savers face financial losses losing their entire savings.

In this context, the agent banking has become a blessing for the rural savers. Agent banking outlets are now available in major markets at union level. Many banks are sending their agents door to door to collect deposits and offering also credit facilities.

Agent banking account holders’ saved Tk 11,986.68 crore till December 2022, according to BB data. People in rural areas are happy with the guaranteed return of their savings. The government is also achieving its financial inclusion target and women empowering in the rural areas.

“Agent banking is providing financial services to underprivileged rural people to compensate for the shortage of traditional banking facilities. Moreover, the participation of women in financial activities is increasing. The increasing activities of agent banking in rural areas illustrate the financial inclusion of marginal people,” said a Bangladesh Bank report titled “Monthly Review on Agent Banking Statistics”.

According to the report, the central bank introduced agent banking in 2013. At present, 31 banks, out of 61, are operating agent banking activities in Bangladesh.

It is less costly compared to the traditional banking system. The customers receive various banking services within real time from this platform through an agent, said the report.

In December 2022, the total number of agents and outlets were 15,226 and 20,836 respectively. The numbers of urban and rural agents were respectively 2,317 and 12,909 while the numbers of urban and rural outlets were 2,862 and 17,974 respectively, the report mentioned.

The number of rural agents and outlets is approximately five and six times higher respectively than that of urban. It means that rural areas are quite covered by banking facilities through agent banking, highlighted the BB report.

Total number of deposit accounts through agent banking as on December, 2022 is 1,74,42,485. Dhaka division has the maximum 41,04,697 deposit accounts and Mymensingh division has the minimum 8,37,942 deposit accounts.

Total male, female and other deposit accounts are 87,93,466, 83,88,168 and 2,60,851 respectively. Besides, the total deposit accounts in urban and rural areas are 24,41,591 and 1,50,00,894 respectively. The urban and rural deposit accounts ratio is 1:6.

So, deposit accounts in rural areas are higher than that of urban which shows that the rural and underserved people are receiving banking facilities through agent banking.

As on December last year, agent banking account holders’ savings amount stood at Tk 11,986.68 crore, according to the Bangladesh Bank report, which was less than one percent of entire deposit amount of banking sector. As on December, 2022 deposit amount was Tk 14,89,787 crore in banking sector.

The BB report observed that agent banking business is higher in Dhaka and Chattogram divisions compared to other divisions. Bank Asia Limited, Islami Bank Bangladesh Limited, Dutch Bangla Bank Limited, Brac Bank Limited and The City Bank Limited are the top five banks in respect of number of agents and outlets. These banks capture over 70 per cent of agent banking in Bangladesh.

Agent banking is also playing a major role in women empowerment. Out of the eight divisions, the number of women account holders is higher in three divisions compared to male.

According to the central bank report, in Chattogram, Dhaka, Khulna, Rajshahi and Rangpur divisions, the number of male account holders is higher than that of female. On the other hand, number of female account holders is higher than that of male in Barishal, Mymensingh and Sylhet. Women of these divisions are playing a vital role in financial inclusion through agent banking.

The popularity of agent banking is increasing day by day for remittance transaction. Rural remittance beneficiaries do not have to go to upazila towns anymore to receive remittance money.

Now they can collect remittance from agent banking outlets near home. In September last year, remittance inflow into the country through agent banking was Tk 10,66,288 crore, which was 42.5 per cent higher than the same month of previous year.