Guidelines for agent banking issued for more financial inclusion

Bangladesh Bank (BB) has issued guidelines on agent banking seeking applications from the commercial banks to start such banking business in the country.

The commercial banks will now be allowed to introduce agent banking for strengthening their ongoing financial inclusion programme through bringing un-banked people into the banking channel, reports the Financial Express (FE).

“We’ve introduced the guidelines aiming to provide regulatory framework for the agent banking which will create an enabling environment for offering safe financial services to the new target group,” BB Executive Director Das Gupta Asim Kumar told the FE.

He said people, who are living in remote and hilly areas, would avail banking services including cash withdrawing and depositing through the agent banking.

agent bankingThe banks may provide their services to un-banked people through introducing such banking without establishing their branches, the central banker explained on Monday.

He also said services including cash-in, cash-out, money transfer, mini statement, account balance, and utility bill payment would be available through 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 or cashier.

“It is the owner of an outlet who conducts banking transactions on behalf of a bank,” the central bank said in its guidelines.

The central bank has also decided to promote this complimentary channel to reach to the poor segment of the society as well as existing bank customers with a range of financial services particularly to geographically dispersed locations.

An agent can act as a representative of more than one bank at a time but at the customer-end point a retail outlet or sub agent of an agent will represent and offer banking services only for a single bank, according to the guidelines.

It also said without having approval from the BB no bank would be allowed to undertake agent banking business. “The banks willing to launch the agent banking business will seek prior approval from the central bank, with full details of the services including tentative implementation schedule.”

The central bank may withhold, suspend or cancel approval for providing agent banking services if it considers any action by any of the parties involved in the system is detrimental to the public interest.

The banks must formulate an internal audit policy to monitor and control the agents, the BB said.

It also said the banks should visit the agents’ outlets at a regular interval to ensure that the agents are working in accordance with the terms and conditions of the agreement and following the rules, regulations and guidelines issued by the regulator.

Agent banking is a new idea for Bangladesh though countries like Brazil, Ghana, Kenya, India, and Pakistan have already introduced the system.