Published on 12:00 AM, September 03, 2018

Lending thru' agent banking on the rise

Bank Asia accounts for 94pc of loans disbursed by all banks

An agent banking outlet of Bank Asia in Rangpur. Bank Asia

Lending through agent banking grew 12.32 percent to Tk 137.32 crore in April-June compared to a quarter ago with Bank Asia leading the pack.

The agent banking windows of six banks disbursed the loans, data from the central bank showed.

Of the amount, Bank Asia alone lent Tk 129 crore, which accounted for 94 percent of the total loans given via the agent banking outlets.

The six banks lend and accept deposits alongside providing other services under the platform while the rest of the 17 licensees have focused on collecting deposits and other services so far.

The central bank issued the agent banking guideline in 2013 but the licensees started full-fledged operations in 2016.

Since then, agent banking, which aims to create an alternative to branch-based banking, has been expanding.

Md Arfan Ali, managing director of Bank Asia, said his bank was now focusing on accelerating loan disbursement through agent banking.

“Initially, banks have put focus on mobilising deposits. But it is time to extend the service by disbursing loans to clients living in the rural and remote parts of the country,” he said.   

Through the window, Bank Asia, one of the pioneers in agent banking, disburses loans ranging from Tk 20,000 to Tk 20 lakh and has set a target to increase the loan portfolio to Tk 250 crore by December this year.

Loan disbursement through the agents creates a win-win situation for banks, agents and customers, since all of them benefit from the service, said Ali.

“It is a cost-effective channel for banks as it reduces the cost of collecting deposits,” he noted.

The bank offers nearly 4 percent interest to depositors and 2 percent commission to agents, while lending at 9 percent to 13 percent on major products. “This means the bank enjoys a good interest margin,” Ali said.

According to the Bank Asia CEO, the cost of fund collected through agents is lower than those mobilised by branches as banks don't have to spend on infrastructure for agent outlet.

The bank will soon offer full-fledged banking services under the umbrella of agent banking, he said.  

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

Latest financial indicators showed that agent banking is on the right track as deposit collection through the service stood at Tk 2,013 crore in April-June, up 23.19 percent from a quarter ago.

Seventeen banks have a combined 17.64 lakh accounts as of June, up from 14.56 lakh three months ago.

There are 3,588 agents at the end of the second quarter, up 11.56 percent from the first quarter of 2018.