Agent banking is a popular financial service that allows banks to operate in remote areas through agents rather than branches. It has been very successful in increasing access to financial services in developing regions like Latin America and Africa. In Bangladesh, agent banking was introduced in 2013 to help the large portion of the population that lacks access to formal banking. It bridges the gap between people and banks by making services available in rural areas at lower costs than microfinance institutions. Banks can offer a full range of services through agents, who are connected to the bank's core platform and conduct transactions in real-time. Agent banking has grown significantly and is expected to have a presence in every district of Bangladesh by 2016. It provides an affordable alternative for serving both unbank

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Introduction
Agent banking is one of the most popular financial services in the world where there are
difficulties in accessing geographical locations easily. And that is why agent banking is very
successful in Latin America & Africa. Other developed like United Kingdom, Australia etc.
countries are also gradually deploying agent banking because it reduces the cost of operating
of the bank. Most of the services of a bank can be provided through agents, thus people of
remotest area of a country can be brought under proper financial structure by the virtue of agent
banking. According to the agent banking guideline the software of any individual agent will
be connected to the core software of the bank, so transactions that will take place in agent
premises will be shown in the banking system real-time and those transactional statements can
be used anywhere and everywhere for different purposes of the client.
Starting its journey in 2011, Mobile banking, commonly referred to as mobile financial services
(MFS), has recorded phenomenal growth in Bangladesh in terms of financial inclusion. But
still half of the population lack access to the formal financial service. To bring this large number
of people under the coverage of the formal financial sector Bangladesh Bank introduced “Agent
Banking” in late 2013. It can help the formal banking sector reach out to the marginalized
people of the society through their agents, who will provide banking services to the people on
behalf of a bank and the nearest branch of the bank will provide necessary logistic support.
Agent Banking bridges the gap between the bank and the unbanked people, makes banking
services accessible to rural people, offers cost effective banking services, minimizes the
operating and establishment costs for banks.
Concept of Agent Banking
Agent Banking means providing limited scale banking and financial services to the
underserved population through engaged agents under a valid agency agreement, rather than a
teller/ cashier. It is the owner of an outlet who conducts banking transactions on behalf of a
bank.
Globally these retailers are being increasingly utilized as important distribution channels for
financial inclusion. Bangladesh Bank has also decided to promote this complimentary channel
to reach to the poor segment of the society as well as existing bank customer with a range of
financial services specially to geographically dispersed locations.

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Agent Banking in Bangladesh
Bangladesh Bank is issuing these guidelines as per authority conferred to it by Article 7A(e)
of Bangladesh Bank Order, 1972, Section 45 of Bank Company Act, 1991 and Section 4 of
Bangladesh Payment and Settlement Systems Regulations, 2009.
There are more than 50 commercial banks including the government owned specialized banks
and many other financial intermediaries actively performing in the market. Yet a large number
of poor people do not have access to formal financial services as shown in a study conducted
by the Institute of Microfinance.
Keeping in mind the financial viability the formal commercial banks mainly focus on large-
scale loans which prevents them from rendering services to a large number of people. Despite
efforts of commercial banks to promote SME (small and medium enterprises) banking, less
than 10 per cent of the population lack access to formal credit.
700+ licensed microfinance institutions (MFIs) operating in different regions of Bangladesh
with a client base of up to 50 million. Most of the big organizations like BRAC, Grameen Bank
and ASA have their outreach in almost all over the country.
They have targeted the poverty-stricken segment and provided small scale financial services to
these marginalized people. But the services provided by the MFIs have their limitations as well.
They charge a high rate of interest and the procedure of collecting overdue payments is
cumbersome.
Therefore, agent banking has the potential to become an alternative financial service channel
for rural populations along with the unbanked population.
In Bangladesh, 12 banks are licensed to provide agent banking, although there are currently
two market leaders actively engaged in expansion: Bank Asia Limited and Dutch-Bangla Bank
Limited (DBBL). Between the two of them, they expect that they will have agent points in
every upazilla in Bangladesh by 2016. Right now, Bank Asia has over 300 agent points, while
DBBL has more than 500 agent points across the country.
Since agent banking is backed by the bank’s core banking platform, banks offering agent
banking can provide a full suite of banking services on behalf of the bank. Loans offered by
agent banking are often at lower interest rates, ranging from 10%-15%, compared to 25% -
30% for MFIs, depending on the repayment terms.

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Agent Banking Services
The Bangladesh Bank has come up with some guidelines on agent banking. According to the
guidelines the following services can be provided under agent banking:
 Account opening and Balance inquiry
 Small value cash deposits and withdrawals
 Inward foreign remittance disbursement
 Facilitating small loan disbursement and recovery of loans, instalments
 Facilitating utility bill payment, fund transfer
 Cash payment under social safety net programe of the government
 Loan, credit and debit card application form collection and processing
 Post-sanction monitoring of loans and advances and follow up loan recovery
 Receiving clearing cheques, collection of insurance premium etc.
Agent Banking Service Limitations
Agents are not allowed to provide the following services on behalf of the banks:
 Giving final approval of opening of bank accounts
 Giving final approval of issuance of bank cards/ cheques
 Dealing with loan/ financial appraisal
 Encashment of cheques and
 Dealing in Foreign currency.
Eligible Entities of Agent Banking
The Banks may engage the following persons/ entities as their Agent:
 NGO‐ MFI’s regulated by Micro credit Regulatory Authority of Bangladesh;
 Other registered NGOs;
 Cooperative Societies supervised by Cooperative Society Act, 2001;
 Post Offices;
 Courier & mailing Service Companies registered under Ministry of Posts &
Telecommunications;
 Companies registered under ‘The Companies Act, 1994’;
 Agents of Mobile Network Operators;

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 Offices of rural and urban local Government institutions;
 Union Information and Service Centre (UISC);
 Individuals capable to handle IT based financial services, agents of insurance
companies, owners of pharmacies, chain shops and petrol pumps/gas stations.
Agent Banking Model
 An agent can act as agent of more than one bank but the sub agent of an agent shall
represent and offer banking services of a single bank.
 The bank shall assign one of its branches/offices to be responsible for the agent
operating in the designated area of the branch.
 The agents are equipped with point of sale (POS) devices, like biometric device, card
reader, mobile phone, barcode scanner and PCs connected with their bank's server.
 Identification of customers shall be done through a PIN/ biometrics.
 The transactions should be executed on real time basis. and customer will get instant
confirmation of their transaction through SMS and debit/ credit slip.
 Agent banking can provide all banking services on behalf of the bank.
 The agent of the concerned bank should deposit a fixed amount of money or should
have a credit limit with the bank and up to that level the agent can make transactions
with the clients.
Regulatory Instructions of Agent Banking
 Without having approval from Bangladesh Bank (BB) no bank shall be allowed to
undertake agent banking business.
 Banks needs approval from Bangladesh Bank to launch Agent Banking with full details
of the services.
 Transaction currency will be taka only.
 Banks shall have to submit copies of agreement(s)/MOU(s) signed between banks and
their agents to Bangladesh Bank.
 The list of the agents with details need to be submitted to Bangladesh Bank and will be
updated on monthly.
 Inward foreign remittance can be transfer through designated agents will be used only
for delivery in local currency.
 The system should not be used for any cross border outward remittance of funds.

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 Banks shall submit overall report on agent banking annually to its Board as well as to
Bangladesh Bank.
 Bangladesh Bank may withhold, suspend or cancel approval for providing agent
banking services.
 Bangladesh Bank can amend the guidelines as and when required.
Agent Banking SWOT Analysis
Agent Banking over Branch Banking
In the last decade, there has been an explosion of different forms of financial services, i.e.,
beyond branches. These have been provided through a variety of different channels, including
mobiles, ATMs, POS devices and banking correspondents.
The heavy cost of servicing low value accounts and providing physical banking infrastructure
to unbanked areas was a major impediment to financial inclusion in the past. Worse, this model
was heavy on the pockets of poor customers, who had to spend time and money to travel long
distances to the nearest branch. Agent banking rationalized banks: operational expenditure, and
reduced the cost to customers, while enabling wider reach.
Agent banking, an important channel innovation that has improved banking penetration in
underserved areas and also by becoming an integrated component of multi-channel banking.
Strengths:
SupportfromMinistry;
Interoperablebetween Banks;
Supported by the corebank All;
payments aretraceable.
Weaknesses:
Rural people are not techy;
People havetrustissue;
Systemor power failure.
Opportunities:
Emerging market;
PositiveEnvironment;
New banks areinvolving.
Threats:
Fraud practices;
Sourceof funds.

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Agent banking enables them to extend their reach not only into areas with poor branch
penetration but also up to the doorstep of those who are reluctant or otherwise unable, to make
a trip to the nearest branch.
Findings
 This service will make the life of the garments owners and many factory owners very
serene because they can pay the wages of the workers through agent banking and show
proper documentation to foreign buyers which is a mandatory regulatory requirement.
 In remotest villages they are arranging a drama or Jari gan shava on the hat day (Usually
all the farmers bring their goods for sale on a hat to fixed market place in a fixed day
of every week). As there is no scope of amusement those areas they are having a very
large audience for their show. In those shows they are communicating the procedure of
agent banking, its security and benefits in the form of drama. And this is working like
magic, more and more people are becoming keen to make their transactions through
proper financial structure.
 At the same time the government of Bangladesh is emphasizing on the agent banking
so that they may able to serve the people in better way than before. Government has to
disburse huge amount of fund every year to the rural population of the country for
various reasons. And in most of the cases the beneficiary receives a portion of the
amount he or she was supposed to receive. The major portions of their earning earnings
are going in the pockets of some corrupted intermediaries. Agent banking can eliminate
those intermediaries completely by enabling government a scope to disburse the funds
to directly to the beneficiary account.
Suggestions
 Banks should take this service more seriously and should try to spread agents
throughout the country as soon as possible
 All Non-government organizations should disburse their grants through agent banking
channels
 The government should some benefits to the banks implementing agent banking
 The government should take initiative to make this service popular amongst the rural
people using the government departments‟ operating in those rurals like LGRD,
Education office, health office etc.

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Conclusion
The most important aspect of agent banking is financial inclusion. The financial inclusion is a
tool for inclusive economic growth and poverty alleviation. The adoption of agent banking has
brought new era in financial inclusion of the banking sector of Bangladesh. The adoption of
agent banking may not work effectively because accepting of agent banking is not free of
challenges or cost.
On the other hand, successful implementation of the agent banking may open a new chapter in
our banking sector. Agent banking can ensure the access of the marginalized people to several
financial services, especially in remote areas. If the vibrant banking sector puts relentless
efforts by following the proper guidance of the central bank, agent banking can prove an
effective tool for enhancing financial inclusion and materializing the dream of a poverty-free
Bangladesh.
References
 Bangladesh Bank (https://www.bb.org.bd/)
 The Financial Express BD (http://www.thefinancialexpress-bd.com/)
 The Scribd (https://www.scribd.com/)
 The Microlinks (https://www.microlinks.org/)
 Bank Asia Limited (2013), “Agent Banking Manual”
 Bangladesh Bank (2013), “Guidelines on Agent Banking for the banks”