Deposits dominate agent banking
Rural clients of agent banking are missing out on its benefits as loan disbursement amounted to less than 5 percent of the deposits collected as of September this year, highlighting lenders’ preference for deposit only.
Banks attracted Tk 6,169 crore in deposits as of September, up from Tk 2,577 crore in the same period a year earlier, according to Bangladesh Bank data.
However, only Tk 306 crore was lent, although it is a twofold rise compared to the Tk 150 crore given out a year ago.
Bankers apprehend that this imbalance created by banks would adversely affect the rural economy in the long run.
Though the jump in lending is stunning, the trend is not good in context to the deposits mobilised, said a central bank official.
“We earlier attained tremendous growth in agent banking as this has the potential to give a boost to financial inclusion and make the rural economy vibrant,” he said.
But it is time to analyse the actual benefits rural clients are deriving from the window, he said.
The present scenario implies that the banks are using agent banking to mop up funds from rural areas and disburse those in urban ones, he said.
The central bank has already noticed the issue and taken different remedial measures, said Md Anwarul Islam, a general manager of the BB.
“Agent banking does not date back that long in the financial sector. So there might have been some hurdles in the spread of the product,” he said.
Nineteen banks have so far commenced agent banking services, but only eight gave out loans.
With a view to taking banking services to the underserved parts of the country, the BB issued the agent banking guideline in 2013. But the licensees did not start full-fledged operations until 2016.
Agent banking offers limited banking and financial services by way of village stores.
The central bank has already started programmes encouraging lenders to go for loan disbursements in tune with deposit mobilisation at rural zones, Islam said.
He went on to express hope that a positive result was in the offing because of the latest measures initiated by the central bank.
The central bank data, however, showed that solely Bank Asia stood out in the incongruity created by banks.
The private commercial bank alone provided Tk 232 crore in loans, meaning 76 percent of the total distributed by banks.
“But we are not satisfied with the achievement, as we have yet to run lending operations in a full-fledged manner through agent banking,” said Md Arfan Ali, managing director of Bank Asia.
The ratio of loan repayment is better in rural areas than in urban ones, he said.
It will take some more time to push up loan disbursement in rural zones through agent banking and Bank Asia is now enhancing its capacity to widen the window on a massive scale, Ali said.
“We are now focusing on creating lending products for rural clients. Small or affordable housing loans could be a good option,” he said.
The bank has set a goal for loan disbursements at 50 percent of what was mobilised as depositis within next year and 100 percent by 2021 through agent banking, he said.