Assignment On

Agent Banking

Submitted to
Md. Alamgir Hossain
Associate Professor
Institute of Business Administration
Jahangirnagar University

Submitted by
Md. Farhan Mohib Tusher
ID: 1999
BBA Batch: 30
Institute of Business Administration
Jahangirnagar University

Course
FIN 303: Bank Management

Date Of Submission
18th February, 2024
Definition
An agent bank is a bank that performs services in some capacity on behalf of an entity. An agent
bank, also known as agency bank, can offer a wide variety of services for businesses looking to
expand internationally. These banks generally act on behalf of another bank or group of banks, but
they can act on behalf of a person or business (Team, 2023)
In other words, refers to providing financial services to the underserved population through
engaged agents who conduct banking transactions on behalf of the bank. These agents or retailers
who are usually the owners of outlets, are increasingly becoming an important distribution channel
in reaching to the unbanked segment of the society in addition to the existing customer with a wide
array of financial services specially to geographically dispersed locations.
History of Agent Baking
Agent Banking has been adopted and implemented with varying degrees of success by a number
of developing countries. Brazil is often recognized as a global pioneer in this area since it was an
early adopter of the model and over the years has developed a mature network of Agent banks
covering more than 99% of the country’s municipalities. Other countries have followed then
including Mexico, Peru, Colombia, Ecuador, Venezuela, Argentina, Bolivia. It was first introduced
in Bangladesh by the Bangladesh Bank (BB) in 2013. The aim is to provide financial services to
the underserved and poor segments of the population, especially those from the geographically
dispersed locations.
The Bangladesh Bank Guidelines (Eligibilty) to be an agent:
• Any Business entity having trade licenses.
• MFI’s regulated by Microcredit Regulatory Authority (MRA) of Bangladesh;
• NGOs registered with Social Welfare Directorate;
• Societies registered under the Societies Registration Act, 1860;
• Cooperative Societies formed and controlled/supervised under Cooperative Society Act,
2001;
• Government offices having branch/unit offices;
• Courier and Mailing Service Companies registered under Ministry of Posts &
Telecommunications;
• Companies registered under The Companies Act, 1994;
• Agents of Mobile network operators;
• Agents of Insurance companies;
• Local government institutions; (Bank, 2024)
According to Bangladesh Bank Guidelines on Agent Banking for the banks, the following issues
should be taken into consideration for selecting agents:
1. Competence to implement and support the proposed activities;
2. Financial soundness and cash handling capability;
3. Ability to meet commitments under adverse conditions;
4. Business reputation;
5. Ability to offer technology based financial services;
6. Security and internal control, audit coverage, reporting and monitoring capacity .
7. Loan defaulter or the convicted person can not apply for agencyship. (Bank B. , 2024)
Importance of Agent Banking
Agent Banking is a cost-effective alternative for the banks as it takes huge amount of money to
open branches and operate them. Already some banks have been operating agent banking and
doing a great job. It may not be financially feasible for a bank to open a full-fledged branch. In
such cases, the agent outlets can act as mirror bank branches. The agents will provide banking
services to the people on behalf of a bank. Through agent banking system, people of remote rural
areas now have access to banking services. They are getting remittance conveniently, and can save
small deposit, pay utility bills and get government financial help without going to bank branches.
However, many people in Bangladesh still remain outside of the banking system. Agent banking
can help them have banking facilities available at their doorsteps. So, commercial banks should
focus more on agent banking and bring everyone under banking services (Express, 2023)
Current Scenario of Agent Banking in Bangladesh
Transactions through agent banking accounts rose more than 46 per cent to Tk 673,069 crore in
2022 in Bangladesh riding on the increased use of the fast-expanding banking window. Since agent
banking started, it has been booming as it is less costly compared to the traditional banking system
and allows customers to receive various banking services in real time through an agent. At present,
31 banks are running agent banking activities. There were about 1.75 crore agent banking accounts
in Bangladesh at the end of 2022, up 25 per cent from 1.40 crore a year earlier. According to BB
data, the total number of agents increased from 13,951 in 2021 to 15,226 at the end of 2022. 12,910
of them are in rural areas while 2,316 are in metropolitan areas (Rahman, 2023)
The top five banks in terms of agents are Bank Asia, Islami Bank Bangladesh Limited, Dutch
Bangla Bank Limited, Brac Bank, and The City Bank, accounting for 70 per cent of the total
agents. The number of rural agents is 5.6 times higher than that of urban agents and the number of
rural outlets is about six times higher than that of urban. This means rural areas are quite covered
by banking facilities through agent banking
The key Benefits of Agent Banking
• Access to Expertise: These banks typically have specialized knowledge and expertise in
particular markets or financial services. Thus, by leveraging this expertise, banks can
expand their reach and offer their clients new products and services.
• Increased Efficiency: Using them, banks can outsource certain functions, such as payment
processing and account management, which can increase efficiency and reduce costs.
• Risk Management: It can play a critical role in risk management for their clients. For
example, in a correspondent banking relationship, such banks are responsible for ensuring
that all transactions comply with applicable laws and regulations, reducing the
correspondent bank’s exposure to risk.
• Market Access: Such banks can provide banks with access to new markets and
geographies, which can help them grow their business and diversify their revenue streams.
• Customization: It can often provide customized solutions to meet the unique needs of its
clients. Thus, it can help banks differentiate themselves from their competitors and provide
a better experience for their clients.

References
Bank, B. (2024). Retrieved from Brac Bank: https://www.bracbank.com/en/agent-banking
Bank, B. (2024). Bangladesh Bank. Retrieved from
https://www.bb.org.bd/aboutus/regulationguideline/psd/agentbanking_banks_v13.pdf
Express, T. F. (2023, February 1). Retrieved from The Financial Express:
https://today.thefinancialexpress.com.bd/editorial/importance-of-agent-banking-
1675170739
Rahman, M. F. (2023, February). Retrieved from The Daily Star:
https://www.thedailystar.net/business/economy/news/agent-banking-transactions-climb-
over-46-2022-3252311
Team, I. (2023). Retrieved from INVESTOPEDIA :
https://www.investopedia.com/terms/a/agent-bank.asp