Permission for New Agent Banking Outlets

Banks must disburse 30pc loans in rural areas

Anisul Islam Noor

16 June, 2021 12:00 AM printer

Bangladesh Bank (BB) has set a condition of disbursing 30 per cent of loans in the rural areas for banks to get permission for opening new agent banking outlets and sub-branches.

The central bank imposed the condition as loan disbursement in the rural areas is poor compared to the deposits collected from the rural areas through agent banking outlets.

BB spokesperson Md Serajul Islam told the Daily Sun that the central banks have set the condition to make sure banks make more investment in rural areas.

According to the latest statistics of Bangladesh Bank, the number of bank branches has increased by only 1.75 percent, while the number of agent banking outlets has increased by more than 48 per cent in the last one year.

The report stated that most of the customers of agent banking are ordinary people living in rural areas. About 87 per cent of agent banking outlets has been established near rural hat-bazzar and 83 per cent of account holders are rural people.

Though deposit volume mobilized by agent banking outlets has been increasing, the rural loans disbursement remains nominal. 

According to BB data, the deposits collected by agent banking outlets jumped to Tk 150.96 billion up to December 2020, while the banks disbursed only Tk 16.93 billion. It is only 12 percent of the total deposit of agent bank outlets.

Banks have opened 166 new branches in rural and urban areas in the last one year. In December 2019, the total number of bank branches in the banking sector was 10,568. In December 2020, the number of branches has increased to 10,734. In the last one year, the number of branches has increased by only 1.56 percent. Among the 166 new branches, 133 branches were opened in the rural areas while the rest 33 in urban areas.

Meanwhile, the number of agent bank branches has increased to 11,929 till December 2020 from 6,914 in December 2019.

A central bank official said most of the banks are collecting deposits through agent banking outlets, but they are not investing through agent banks.

The BB official said one of the purposes of issuing agent banking license was to take banking services to the doorsteps of the marginalized people in rural areas so that they can be brought into mainstream economic activities. “This means not only collecting deposits from the rural people but also making them self-reliant by providing loans to small rural entrepreneurs. But this purpose is being ignored,” he added.

Economist Dr ABM Mirza Azizul Islam said the rural economy makes a huge contribution to the national economy. “Banks have to invest more in the rural areas for the greater interest of the national economy,” he added.