Agent banking getting popular with remitters

Remittance inflow through agent banking rose significantly in the first quarter of 2017 as the service is increasingly gaining ground thanks to its cost-effectiveness.

Banks received Tk 262 crore from January to March through agent banking channel whereas the network brought home Tk 309 crore throughout 2016 when the service was introduced.

While the popularity of agent banking is on the rise, mobile banking, another popular platform for sending money, is losing pace due to higher cost.

Remittance channeled through mobile banking declined 6.66 percent to Tk 22 crore in the first quarter compared to the same quarter a year ago, according to Bangladesh Bank data.

Monthly remittance receipt through mobile banking was Tk 8.12 crore in December last year, which came down to Tk 7.71 crore in March.

Currently 11 banks are providing agent banking service while 17 banks run mobile banking operations.

Remitters prefer agent banking to send money home because it does not require any additional fee to withdraw money from accounts, said a senior executive of a private bank.

But mobile banking charges Tk 2 for cashing out every Tk 100, a fee which is deemed costlier by many beneficiaries, he said.

Mobile banking is mainly popular for local transactions involving small amounts, according to the banker.

The central bank issued the agent banking guideline in 2013 but it was only last year when the licencees started full-fledged operation.

Agent banking offers limited banking and financial services to the underserved population by engaging representatives under an agency agreement. It is the owner of an outlet who conducts banking transactions on behalf of a bank.

Agents provide services such as cash deposits, withdrawals, remittance disbursement, small value loan disbursement, recovery of loans, and cash payments under the government's social safety net programmes.

The number of agent banking accounts rose 31 percent in the first quarter to 712,499 from 544,536 in December. Dutch-Bangla Bank, the leader in agent banking, disbursed Tk 168 crore of remittance in the quarter, followed by Bank Asia and Al-Arafah Islami Bank.

Outstanding balance with agent banking accounts stood at Tk 481 crore in March, which was Tk 380 crore in December. The total number of agents rose to 1,755 in March from 1,646 in December. Social Islami, Modhumoti, Mutual Trust, NRB Commercial, Standard, Agrani, Midland, and First Security Islami Bank also provide agent banking service.