Chapter One

Introduction
The formal banking sector in the country has tried to expand its outreach and bring the
unbanked people in the society under its umbrella. As a part of financial inclusion and
offering limited banking services to both rural and urban unbanked people,
Bangladesh Bank (BB) initiated Agent Banking. In order to ensure the access of
unbanked people, Agent Banking and Mobile Financial Services (MFS) have been
introduced in Bangladesh. Agent banking and Mobile Financial Services (MFS) offer
an alternative to conventional branch-based banking to the customers through
appointed agents being facilitated by the Mobile Network Operator (MNO)/Solution
Providers instead of bank branches or through bank employees. It will also provide
banking services to the bank customers through the engaged agents under a valid
agency agreement, rather than a teller/cashier.
Agent banking has worked wonders in several developing countries in different parts
of the world like Brazil, Columbia, Peru, Malaysia, Kenya and so on. Agent banking
has been a revolutionary inclusion in the financial system of Brazil as the agents there
deal with almost everything like bills and pension payments, cash deposits,
withdrawals and money transfer. The list is not limited to these only, because the
number of services provided by the agent bankers is increasing with the passage of
time. (Ullah & Haque, 2014) Brazil is often recognized as a global pioneer in this area
and over the years, it has developed a mature network of agent banks covering more
than 99 percent of the country's municipalities. In Asia, countries like India, Pakistan
and Philippines have also utilized the agent banking model to expand financial
services. (Banarjee, 2014)
Globally agent banking activities 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
1

geographically dispersed locations. With a view to ensuring the safety, security and
soundness of the proposed delivery channel Agent Banking Guidelines have been
framed by the Bangladesh Bank (BB) to permit banks to be engaged in agent banking.
To promote and establish the agent baking, BB provides regulatory framework for
agent banking and ensures compliance with AntiMoney Laundering and Combating
Financing of Terrorism (AML/CFT) standards.
1.1 Rational of the study
There has been no comprehensive study on status of banks of the country in their
agent banking activities and their compliance of the BBs Agent Banking Guideline.
The study will assist to meet this particular gap and identify where there are the scopes
of improvements.
The study is expected that it would help bank policy makers in identifying the key
challenges involved in agent banking operations and coming up with strategies that
will lead to improve the performance of banking activities in Bangladesh. Secondly,
the study will also be helpful to academicians who will use this study as a source of
reference. Thirdly, the findings of this study will assist to take strategy to perform
better in banking sector. Finally, the study will help the banks in identifying and
understanding the external environment and competitive strategy that can be applied to
ensure the superior performance of the banks in Bangladesh.
1.2 Objectives of the study
The objective of the study is to identify the prospects of agent banking implemented in
Bangladesh and point out the challenges to operate the agent banking activities in an
efficient manner. In addition, this study helps to:
Assess how agent banking activities are practiced by the banking financial

institutions in Bangladesh.
Identify the prospects of agent banking in Bangladesh and
Find out the challenges that may be considered as opportunities or barriers to

operate the agent banking activities efficiently in Bangladesh.

Put forwards/raise out some suggestions/recommendations with a view to
ensure reliable agent banking services in BD.

1.3 Scope
2

Agent banking is now a buzzword in the banking industry. Agent banking is

comparatively a new idea that can help the formal banking sector as well as its
importance is immense in paving the way for financial inclusion. But, many of us,
including bankers, still do not have a clear perception of agent banking, its services,
risks and responsibilities and other regulatory issues.
Access to affordable financial services will lead to increase economic activities and
employment opportunities for rural households/nonprivileged segments of the
population, with a possible multiplier effect on the economy. Agent banking could
enable people to have a higher disposable income which in turn leads to greater
savings and a wider deposit base for the banks and other financial institutions.
This is the area where lot of researches could be conducted and immense value would
be added to expand the banking services to the non privileged, underserved population
and the poor segment of the society, especially from geographically dispersed location.
1.4 Methodology
The key approach of this study is to measure the prospects and the challenges of agent
banking activities in Bangladesh. Collecting of information from all customers is not
possible, whereas, simple random sampling was used in this study. As regards of the
selection of the respondents, both the bank officials and agents were selected. In
addition, customers of agent banking were also included in this study.
Keeping in the mind the background and the objectives of the study both primary and
secondary data have been collected. The secondary information has been collected
from- articles in newspapers, Bangladesh Bank Guidelines, presented paper of the
different conferences, related websites and so on.

Divisions

Percentage of agent outlets by

divisions

No. sample has taken

Dhaka

0.53012

22

Chittagong

0.240964

Khulna

0.036145

1
3

Rajshahi

0.13253

Rangpur

0.060241

0
Total

32

Primary data have been collected on the basis of structured questionnaire. A total of
two banks out of nine have been selected as sample banks which get the license of
Agent Banking from Bangladesh Bank. Two banks were selected on the basis of
operations of agent banking and rest of the banks were did not started its operations.
Thirty two agents were included who perform agent banking activities in Bangladesh
and thirty two customers were included in this study through questionnaire survey,
focus group discussions (FGD), teleconferencing.
1.5 Organization of the dissertation
The study is divided into seven chapters to make the study more fruitful to readers,
researchers, bankers and interested users. First chapter represents the introduction of
the study, objective of the study, methodology of this study. Second chapter comprises
of the literature review of this study. Third chapter consists of theoretical framework
or concept of agent baking. Chapter four shows the regulatory instructions in operating
agent banking activities in Bangladesh. Global scenario on agent banking gets the
upper hand in chapter five. Chapter six represents data analysis, presentation and
interpretations. Chapter seven includes findings, recommendations and conclusion.

1.6 Limitations of the study

i)
The data were not available as requirement but the best effort was given to
ii)

convert the collected data as per necessity.

The respondents were some extant reluctant to give the adequate time for
filling up the questionnaire. However, I had to convince them to gather the
necessary data.

Chapter Two
Literature review
The term, 'Financial Inclusion', has gained importance all over the world from the
beginning of this century. Financial inclusion has direct relationship with access to finance.
Access to finance fundamentally depends on demand while financial inclusion on supply.
Access to finance refers to the right of entry of individuals or enterprises to financial
services, including credit, deposit, payment, and other financial services. People who have
no access to financial services are unbanked and those who have limited access are underbanked. One of the major goals of financial inclusion is the delivery of financial services to
5

the disadvantaged and low-income segments of society at affordable costs. Contrarily,

where financial services are not available or affordable, it is financial exclusion. According
to World Bank, an estimated 2.5 billion working-age adults globally have no access to
formal financial services delivered by regulated financial institutions. The availability of
banking and payment services to the entire population without discrimination is the prime
objective of financial inclusion policy (Haque, Financial inclusion goals : Barriers and
challenges, 2013).
An inclusion has now come to mean much more than just banking the unbanked. It now
refers to the convergence of various bank and non-bank players to provide financial
services at lower cost, wider reach and greater convenience to all end consumers of
financial services, unbanked or otherwise. How does this agency banking-inspired the
financial inclusion? In one sentence: by opening up new opportunities. All banking
consumers are also consumers wrap up the financing deal once the purchase of other
products, which they procure from different channels. By partnering with an agent, banks
can participate in these transactions, which may be non-financial in nature but separately;
the dealer is able to close the sale right away; and the financing partner has access to a
more or less captive market. This is just one example of the linkage between agency
banking and new-definition financial inclusion. Banks can enter into similar partnerships
with white goods dealers, large retail chains, and so on. They also have the option of
entering into different kinds of distribution alliances with a variety of agents, from
individuals to post offices to news agents to grocers to regulators even, to serve the unmet
financial needs of unbanked as well as banked customers (Jayanti, 2012).
Branchless banking is the first step into financial inclusion and, therefore, should adhere to
the same government legislation of the banking sector at large, allowing the government to
have a unified policy. Agent banking can be worked as a harbinger of branchless banking
in Bangladesh. Branchless banking is a fundamental driver of E-payments, which are not
necessarily limited to mobile. E-payments offer many benefits, from the improved
management of cash circulation to increased transparency and traceability and improved
oversight to help comply with regulations. Branchless banking allows governments to
distribute social welfare and other government benefit programs safely, conveniently and
6

securely while reducing graft and ensuring the aid reaches the intended recipients.
(Mroueh, 2014).
In the last decade, there has been an explosion of different forms of remote access financial
services, i.e., beyond branches. These have been provided through a variety of different
channels, including mobile phones, automatic teller machines (ATMs), and Point-Of-Sale
(POS) devices and banking correspondents. In many countries, these branchless channels
have made an important contribution to enhancing financial inclusion by reaching people
that traditional, branch-based structures would have been unable to reach. One of the main
obstacles to financial inclusion is cost: both the cost to banks involved in servicing lowvalue accounts and extending physical infrastructure to remote rural areas, and the cost (in
money and time) incurred by customers in remote areas to reach bank branches. Agent
banking is rapidly evolving and its regulation plays a central role in enabling (or
sometimes limiting) its spread. (Enhancing Financial Innovation and Acess, October 2011).
The advantages of agent banking are multifold. Firstly, 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. Agency banking rationalized banks operational expenditure, and
reduced the cost to customers, while enabling wider reach. In time, agents also took up the
responsibility of on boarding, managing and servicing customers, making agency banking
a lucrative option for banking institutions.
Secondly, Channel innovation has revolutionized the face of banking around the world.
Consumers adoption of multiple channels has fueled their expectation of true multi
channel banking, which allows them to transition seamlessly between touch points as they
fulfill several, or even a single transaction. Agency banking, an important channel
innovation that has improved banking penetration in underserved areas in the past, can now
help banks tap into other segments, by becoming an integrated component of multi channel
banking.

Furthermore, changing customer demographics, competition and a host of economic

factors have forced banks to take a relook at their distribution strategy. Agency 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. Regulators want to achieve financial inclusion through a profitable, low
cost delivery model that simultaneously protects consumers and the integrity of financial
services. There might be instances when banking agents fail to provide quality service or
compromise customer data. This can affect the credibility of banks, a matter of concern to
both banking institutions and their regulators. Hence, banks must take care to sign up the
right agents, and regularly monitor their performance. (Jayanti, 2012)
In a growing number of countries, banks and other commercial financial service providers
are finding new ways to make money delivering financial services to unbanked people.
Rather than using bank branches and their own field officers, they offer banking and
payment services through postal and retail outlets, including grocery stores, pharmacies,
seed and fertilizer retailers, and gas stations, among others. For poor people, branchless
banking through retail agents may be more convenient and efficient than going to a bank
branch. For many poor customers, it will be the first time they have access to any formal
financial services and formal services are usually significantly safer and cheaper than
informal alternatives. Agent banking through retail agents appeals to policymakers and
regulators because it has the potential to extend financial services to unbanked and
marginalized communities. But it also challenges them to ask: What are the risks of these
new approaches, and are they different from those of conventional branch-based banking?
How should we respond to these risks, so as to permit branchless banking with retail
agents to operate safely and expand access to finance? (Timothy R. Lyman, 2006).

Chapter Three
Concept or/and Theoretical framework of Agent Banking
Agent Banking means providing limited scale banking and financial services to the
underserved and unbanked 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.
Target groups of customers of agent banking are those who are the nonprivileged,
underserved population and the poor segment of the society, especially from
geographically dispersed location. To include indigents, destitute, poor people under the

formal banking sector, Central Bank of Bangladesh is also issued guidelines for the banks
to makes its objectives successful.
Banking agents help financial institutions to divert existing customers from crowded
branches providing a complementary, often more convenient channel of accessing bank
services. Financial institutions, in developing markets, reach an additional client segment
or geography. Reaching poor clients in rural areas is often prohibitively expensive for
financial institutions since transaction numbers and volumes do not cover the cost of a
branch. (Kitaka, 2001) In such environments banking agents that piggy back on existing
retail infrastructure and lower set up and running cost can play a vital role in offering many
low income people their first time access to a range of financial services. Also, low income
clients often feel more comfortable banking at their local store than walking into a marble
branch. (Ignacio Mas, 2008)
The client benefit from the Agents banks with Lower transaction cost, service closer to
client s home; client would visit store anyway for groceries, Longer opening hours, Shorter
lines than in branches, More accessible for illiterates and the very poor who might feel
intimidated in branches. Increased sales from additional foot traffic, Differentiation from
other businesses, Reputation from affiliation with well-known financial institution,
Additional revenue from commissions and incentives, Increased customer base and market
share, Increased coverage with low-cost solution in areas with potentially less number and
volume of transactions, Increased revenue from additional investment, interest, and fee
income, Improved indirect branch productivity by reducing congestion. (Cohen, 2002).
In the most basic version of the bank-led theory of branchless banking, a licensed financial
institution (typically a bank) delivers financial services through a retail agent. That is, the
bank develops financial products and services, but distributes them through retail agents
who handle all or most customer interaction. (Timothy R. Lyman, 2006) So, we can say
that Agent baking is followed the bank-led theory of branchless banking.
In Nonbank-Led theory, customers do not deal with a bank, nor do they maintain a bank
account. Instead, customers deal with a Non-Bank firm-either a mobile network operator or
10

prepaid card issuer and retail agents serve as the point of customer contact such as- Mbanking.
One of the primary impediments to providing financial services to the poor through
branches and other bank-based delivery channels is the high costs inherent in these
traditional banking methods. The amount of money expended by financial agent banks to
serve a poor customer with a small balance and conducting small transactions is simply too
great to make such accounts viable. In addition, when financial agent banks do not have
branches that are close to the customer, the customer is less likely to use and transact with
their service. However, with the emergence of new delivery models as a way to drastically
change the economics of banking the poor, retail points such as agent banking can offer
saving services in a commercially viable way by reducing fixed costs and encouraging
entrepreneurs to use the service more often.
3.1 Differences between M-Banking and Agent Banking
In generally, it is seemed to be that there are no differences between M-Banking and Agent
Banking but the major differences are:

Table1: Differences between M-Banking and Agent Banking

Account
Chequing
account
Charges of
services
Link up with
bank account
IT

Mobile Banking
Customer account, termed
Mobile Account will rest with
the bank and will be accessible
through customers mobile device.
Mobile Account will be a non
chequing limited purpose account.
Customers are charged directly for
these products and services.
Mobile account may be linked wit
h customer's bank account
M-banking considers

Agent Banking
Customer account will be termed
as Bank Account.

Customer account will be treated

as a chequing account.
Customers should not be charged
directly by the agents for
providing services to them.
It is already a customers bank
account.
Its infrastructure able to support
11

real time processing, provide a

secured network including end to
end encryption.
At maximum two (02)
transactions (deposit and
Transactions
withdrawal) per client per day.
limit
Withdrawal limit per transaction
of each client will be restricted to
Tk. 50,000.00
Source: Guidelines on Agent Banking for the banks

Infrastructur
e

Confidentiality, Integrity,
Authorization and Nonrepudiation.
at maximum Tk. 10,000 daily and
a total of Tk. 25,000 on monthly
basis.

3.2 Differences between Branch baking and Agent banking

Although agent banking performs under a branch, some extent agent banking is different
from branch banking. Central bank clearly defines the services which are not permissible
by agents. Following services are made the difference more clear.
Agents are not allowed to provide the following services on behalf of the banks:
i.
ii.
iii.
iv.

Giving final approval of opening of bank accounts and issuance of bank

cards/cheques
Dealing with loan/ financial appraisal
Encashment of cheques and
Dealing in Foreign currency

In addition, An Agent must provide, as a minimum, cash deposit and cash withdrawal
services. The agent's activities would be within normal course of banking business of the
scheduled banks but conducted at places other than bank premises/ ATM booths. Agent
must provide services in the designated business premises.
3.3 How does Agent banking work?
3.3.1 Cash deposit
Steps of Cash in form agent outlets
Step 1: Customer comes to Sub-Agent/Teller Point for deposit; inform his account
number/show account card and Hand over the cash to Sub-Agent/Teller
Step 2: Sub-Agent/Teller Log-in to Portal/ e-POS/ m-POS terminal by using
12

Step 3:
Step 4:
Step 5:
Step 6:
Step 7:
Step 8:
Step 9:

Password/PIN
System will verify device MAC ID and will allow login
Sub-Agent/Teller initiates deposit transaction
Input account number
Input amount
Input Sub-Agent/Teller FP
System will debit sub-agent account and credit customer account
Sub-Agent/Teller will inform customer and provide customer copy of deposit

slip
Step 10: Customer will be notified through SMS, if mobile number is linked
3.3.2 Cash withdraw
Steps of Cash out form agent outlets
Step 1: Customer comes to Sub-Agent/Teller Point for withdrawal, inform account
number/show account card and amount
Step 2: Sub-Agent/Teller Log-in to Portal/ e-POS/m-POS terminal by using
Step 3:
Step 4:
Step 5:
Step 6:

Password/PIN System will verify device MAC ID and will allow login
Sub-Agent/Teller initiates Withdrawal transaction
Input account number
Input amount
Customer will verify the account number and amount and then Input Customer

FP
Step 7: System will debit customer account and credit Sub-Agent account
Step 8: Sub-Agent/Teller will hand over cash to customer
Step 9: Customer will be notified through SMS, if mobile number is linked
3.3.3 Balance inquiry
Steps of balance inquiry form agent outlets
Step 1: Customer comes to Sub-Agent Point /Teller Point /FT Officer/ROs for balance
checks and tells account number /show account card.
Step 2: Sub-Agent/Teller/FT Officer/ROs Log-in to Portal/ e-POS/m-POS terminal by
Step 3:
Step 4:
Step 5:
Step 6:
Step 7:
Step 8:

using Password/PIN.
System will verify device MAC ID and will allow login
Initiates Balance inquiry transaction
Input account number
Customer will verify the account number and then Input Customer FP
System shows customer balance
Sub-Agent/Teller/FT Officer/ROs inform customer/Provide slip

13

3.3.4 Bill payment

Steps of Bill payment form agent outlets
Step 1: Customer comes to Sub-Agent/Teller Point for bill payment, tells his biller ID,
bill number, account number and amount.
Step 2: Sub-Agent/Teller Log-in to Portal/e-POS/m-POS terminal by using
Step 3:
Step 4:
Step 5:
Step 6:

Password/PIN
System will verify device MAC ID and will allow login
Sub-Agent/Teller Initiates Bill Pay transaction
Input biller ID, bill number, account number and amount
Customer will verify account number, utility company ID/ code, bill number

and amount and then input the FP.

Step 7: System will debit customer account and credit biller account
Step 8: Customer will be notified, if mobile number is linked and provided with a slip
3.3.5 Person to person transfer
Steps of Person to person fund transfer form agent outlets
Step 1: Customer comes to Sub-Agent/Teller Point for fund transfer; inform customer
account number, destination account number and amount.
Step 2: Sub-Agent/Teller Log-in to Portal/e-POS /m-POS terminal by using
Step 3:
Step 4:
Step 5:
Step 6:
Step 7:
Step 8:
Step 9:
Step 10:

Password/PIN
System will verify device MAC ID and will allow logiSub-Agent/Teller
Input source account (customer) number
Input destination account number
Input amount
Customer will verify the destination account number and amount and then
Input Customer FP
System will debit customer account and credit destination account
Customer (sender/receiver) will be notified/ Printed slip will be provided

3.4 System requirement for Agent Banking

It is a big challenge to make the payment convenient, safe, and efficient for the rural under
privileged people. To ensure the safety, efficiency, reliability of agent banking transaction,
the system requirement is divided into three phases.
First phases consists of IT infrastructure which includes real time processing means a
processing method that is used when it is essential that the input request is dealt with
quickly enough so as to be able to control an output properly. It also includes end to end
14

encryption. End to end encryption refers to a digital communications paradigm of

uninterrupted protection of data traveling between two communicating parties without
being intercepted or read by other parties except for the originating party encrypting data to
be readable only by the intended recipient, and the receiving party decrypting it, with no
involvement in said encryption by third parties.

Able to
support real
time
processing

Table 2: System requriement of Agent Banking

At the end point,
Should be robust in
Able to provide a
devices should not
managing
secured network
store the sensitive
infrastructure capacity
including end to
customer information
to support agent
end encryption
e.g. Pin/ Password/
banking services
Biometrics
Source: Guidelines on Agent Banking for Banks

Second phase of system requirement of Agent Banking it Payment Acceptance Devices

(PAD). Payment Acceptance Devices (PAD) must be able to support minimum Two Factor
Authentication (TFA)/Two-step verification for agent and customer registration. Two
Factor Authentication (TFA) means providing unambiguous identification of users by
means of the combination of two different components. These components may be
something that the user knows, something that the user possesses or something that is
inseparable from the user. A good example from everyday life is the withdrawing of money
from a cash machine. Only the correct combination of a bank card (something that the user
possesses) and a PIN (personal identification number, i.e. something that the user knows)
allow the transaction to be carried out.
PAD must be able to support the requirement of end-to-end encryption based on industry
standards algorithm (from end-point devices i.e. PAD to host system) and PAD must not
store any sensitive customer information like PIN/Password at the end-point devices like
PAD.
Third phase of Agent Banking is Agent Banking Application/Software must be able to
support host validation for PIN/Password authentication, be able to provide device
authentication during session activation and transaction processing at host level, be capable

15

to have limit management feature for agents, customer, transaction and other limit
requirements, include transaction and system audit trail.

Chapter Four
Regulatory Instructions on Agent Banking
Agent banking is comparatively a new idea that can help the formal banking sector reach
out to the marginalized people of the society through their agents, who will provide several
banking services to the people locally. Agents will provide banking services to the people
on behalf of a bank and the nearest branch of the bank will provide necessary logistic
support. In short, agent outlets will be mirror bank branches. The challenges for banks will
be to devise a business model that will generate adequate revenue to compensate all parties
in the value chain as well as shape up the agent network and tackle the operational
challenges to selecting, training and managing agents.
With a view to ensuring the safety, security and soundness of the proposed delivery
channel Agent Banking Guidelines have been framed by the Bangladesh Bank to permit
banks to be engaged in agent banking.
Banks will give much emphasis on the rural area to cover lion share of the target group but
at the same time will not ignore the rest of the target group by concentrating on the urban
area in a limited scope. The ratio of the number of sub-agents/outlets of a bank will be 2:1
for rural and urban area. That means, a bank must have at least 2 rural agent banking outlet
to have 1 urban agent banking outlet. Banks will provide priority to rural area for their
operation of agent banking.
Banks have to ensure the compliance with the minimum requirements to establishing
sound systems and vigorous infrastructure to support agent banking. IT infrastructure must
be able to support real-time processing, provide a secured network including end-to-end
encryption, and robust in managing structural capacity to support agent banking services.

16

An Agent must provide, as a minimum, cash deposit and cash withdrawal services. The
agent's activities would be within normal course of banking business of the scheduled
banks but conducted at places other than bank premises/ ATM booths. Agent must provide
services in the designated business premises.
4.1 Services of agent banking directed by Central Bank
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:
1. Collection of small value cash deposits and cash withdrawals (ceiling should be
2.
3.
4.
5.
6.

determined by the BB from time to time),

Inward foreign remittance disbursement,
Facilitating small loan disbursement and recovery of loans, instalments,
Facilitating utility bill payment,
Cash payment under social safety net programme of the government,
Facilitating fund transfer (ceiling should be determined by the BB from time to

time),
7. Balance inquiry,
8. Collection and processing of forms and documents in relation to account opening,
loan application, credit and debit card application from public,
9. Post-sanction monitoring of loans and advances and follow up loan recovery,
10. Receiving clearing cheques, and
11. Other functions like collection of insurance premium including micro insurance etc.
4.2 Eligible entities or persons to become agent
According to the guideline of the Agent Banking, banks may engage the following
persons/ entities as their Agent:
1. NGOMFIs regulated by Micro credit Regulatory Authority of Bangladesh
2. Other registered NGOs
3. Cooperative Societies formed and controlled/ supervised under Cooperative Society
Act,2001
4. Post Offices
5. Courier and Mailing Service Companies registered under Ministry of Posts
&Telecommunications
6. Companies registered under The Companies Act, 1994
17

7. Agents of Mobile Network Operators

8. Offices of rural and urban local Government institutions
9. Union Information and Service Centre (UISC)
10. Educated Individuals capable to handle IT based financial services, agents of
insurance companies, owners of pharmacies, chain shops and petrol pumps/ gas
stations
Without having approval from Bangladesh Bank no bank shall be allowed to undertake
agent banking business. In addition, Banks willing to launch Agent Banking Business shall
seek prior approval from Bangladesh Bank, with full details of the services including
tentative implementation schedule. Specially, Transaction currency will be taka only.
Furthermore, Banks shall have to submit copies of agreement(s)/MOU(s) signed between
banks and their agents to Bangladesh Bank before launching the product.
4.3 Mitigation of risks and disputes
To mitigate the risk, Banks shall be responsible for mitigation of all kinds of risks such as
liquidity, operational, fraud, cheating including money laundering and terrorist financing
risks. Technical risks should be covered by the solution provider. Furthermore, the banks
must bear all the liabilities that arise from any improper action on the part of their engaged
agents.
Banks should consider the following issues to select agents:
1.
2.
3.
4.
5.
6.
7.

Competence to implement and support the proposed activities

Financial soundness and cash handling capability
Ability to meet commitments under adverse conditions
Business reputation
Ability to offer technology based financial services
Security and internal control, audit coverage, reporting and monitoring capacity
Loan defaulter or the convicted person can not apply for agencyship.

The bank needs to ensure that adequate measures for customer protection, awareness and
dispute resolution are in place. The bank must run a call centre to receive and process
disputes 24 hours a day via telephone, SMS, IVR and mail. Each of the disputes received
by the centre must be resolved within 3 working days. The bank should ensure that they
18

are sufficiently equipped to keep track/log of all disputes and review status of each
disputes and redressed of the same within stipulated time.

Chapter Five
Global Scenario of Agent Banking
In the last decade, there has been an explosion of different forms of remote access financial
services, i.e., beyond branches. These have been provided through a variety of different
channels, including mobile phones, Automatic Teller Machines (ATMs), Point-Of-Sale
19

(POS) devices and banking correspondents. In many countries, these branchless channels
have made an important contribution to enhancing financial inclusion by reaching people
that traditional, branch-based structures would have been unable to reach. One of the main
obstacles to financial inclusion is cost: both the cost to banks involved in servicing lowvalue accounts and extending physical infrastructure to remote rural areas, and the cost (in
money and time) incurred by customers in remote areas to reach bank branches. Agent
banking is rapidly evolving and its regulation plays a central role in enabling its spread.
Agent banking is quickly becoming recognized as a viable strategy in many countries for
extending formal financial services into poor and rural areas. In recent years, agent
banking has been adopted and implemented with varying degrees of success by a number
of developing countries, particularly in Latin America.
Table 3: The adoption of Agent banking regulation by different countries

Countries

Year

Countries

Year

Columbia

2006

Mexico

2009

Brazil

2000

Ecuador

2008

Peru

2005

Venezuela

2009

Kenya

2009

Argentina

2010

India

2006

Bolivia

2006

Bangladesh

2013

Source: Alliance for Financial Inclusion

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 countrys municipalities. Other countries in Latin America have
followed suit, including Mexico, Peru, Colombia, Ecuador, Venezuela, Argentina, and
Bolivia. Other countries around the world have also utilized the agent banking model to
expand financial services, including Pakistan, Philippines, Kenya, South Africa, Uganda,
and India.
20

In recent years, no example of branchless banking has done more to stoke enthusiasm than
M-PESA, the mobile payment service offered by Safaricom, Kenyas largest MNO.
Sinceits commercial launch in March 2007, more than 7 million peopleapproximately
one in four adult Kenyanshave signed up. Largely (though not only) due to M-PESA, the
proportion of Kenyans considered to be formally financially included has almost doubled
to 41 percent in just three years (FSD Kenya 2009). M-PESA sometimes overshadows the
success of a different approach to branchless banking found in Brazil that relies not on
mobile phones but on Point-Of-Sale (POS) devices deployed at agents. Following a rampup of agents by state and private banks, Brazil could claim by 2005 that every municipality
in the country had a financial service point, changing the geography of financial inclusion.
Based on these and several other promising pioneers, donors are investing large sums into
branchless banking.
The regulation, design, and implementation of agent banking vary across countries. These
differences are evident in the variety of services offered by agents, the types of businesses
acting as agents, the types of financial institutions that work through agents and the
business structures employed to manage them.
Table 4: Permissible agent Banking activities by different countries
Conductin
Countrie

Cash

Cash

-in

-out

Processin

Sending/disbursin

Sending/disbursin

g bill

g domestic money

g foreign money

payments

transfers

transfers

g CDD

Processing

prior to

account

opening

applicatio

bank

Openin
g bank
account

Accepting
Disbursin

loan

g credit

repayment
s

account
Colombi

Brazil

Peru

Kenya

Unclear

India

Unclear

Uncle
ar

Source: Oxford Policy Management

In Mexico in 2010, 12 financial institutions established more than 9,000 banking agents.
This is the equivalent of just over one banking agent per every 10,000 adults in the country.
Although this placed Mexico well behind its neighbors, Brazil, Colombia, and Peru (as
seen in Figure ). Compare to other countries, Bangladesh has less significant than the Latin
21

American countries. It is expected that our country will embrace the maximum agent per
every ten thousand adults because more people are included in financial sector day by day.
Figure 1: No. of Banking Agents per 10000 adults

0.01
1.17
3.08
3.81
4.31

Countries

10.45
0

10

12

No. of agents

Source: Oxford Police Management

Kenya, another country that implemented agent banking in 2010, already has almost 9,000
bank agents. With a smaller adult population than Mexico, this amounts to nearly four
agents per every 10,000 adults in Kenya.
Figure 2: Total number of agents in different countries

200000 160943
150000
100000
No. of agents

50000

58351
16331 13296 9204

5474

83

Countries

22

Source: Oxford Police Management

After 12 years of implementation, today Brazil has 160943 agents. Peru, in its seventh
year, has 9204 agents. Colombia, in its fifth year, has 13296 agents. India has 58351 agents
within the nine years of adopting the regulation of agent banking. Compare to other
countries, Bangladesh is novice in the new tools of financial inclusion.

Table 5: Size of agent network, by year the model was introduced

Year of agent banking
was launched

Year of agent banking

regulation was
introduced

Number of agents
currently functioning

Brazil1

2000

2000

160943

Peru2

2008

2005

9204

Columbia3

2007

2006

13296

Kenya4

2010

2009

16331

Bangladesh

2014

2013

83

Source: Alliance for financial inclusion

1 As at end of December 2011

2 As at end of December 2011

3 As at end of December 2011

4 As at end of December 2011

23

Brazil is the pioneer in agent banking. In addition, it introduced the agent banking
approximately thirteen years ago. There are many areas in our country where the economic
condition of the people is not good and profits from those areas are not that much that can
offset a branch's fixed and operational expenditure. Banks may thrive by covering these
areas through engaging local agents as agents do not have to incur any significant amount
of cost for rendering the services. In Brazil, Banco Bradesco partnered with their national
post office as agents to cover such new areas.
Experiences in India and abroad has shown that traditional Banks have struggled to reach
the poor with financial services. Recognizing this fact, many countries such as Brazil,
Indonesia, Malaysia, Mexico etc. have allowed non-banks to offer payments, deposits and
cash-in/cash-out services. Similarly, in India, enabling an inclusive competitive landscape
should be a top priority. India has several strategic assets providing favourable initial
conditions for transformational change towards digital financial inclusion. A strong
banking network (1,15,000 branches) linked to eKuber (RBI's Core Banking Solution),
now spreading into unbanked rural areas. A significant outreach of India Post (1,55,000
outlets), POS and ATM terminals which can facilitate a vibrant cash-in/cash-out network
across the country.

Chapter Six
24

Data Analysis and Interpretation

Running any bank branch in a remote area is not very cost-effective. Setting up a formal
banking branch involves a large amount of fixed cost and a high monthly variable cost for
maintaining it. But the number of transactions that take place in rural, remote or less
densely-populated areas is not enough to make up for those costs. Agent banking can
ensure the access of the marginalised people to several financial services, especially in
remote areas. It can work wonders in financial inclusion and enhancing financial activity in
remote areas.
6.1 Present status of agent banking in Bangladesh
The central bank has already issued licences to the nine banks till June 2015 for running
agent banking, under which financial services would be offered through agents instead of
branches. Out of nine banks (Bank Asia Limited, Dutch Bangla Bank Limited, Export
Import Bank Limited, Al-Arafah Islami Bank Limited, NRB Commercial Bank Limited,
Modhumoti Bank Limited, Standard Bank Limited, Social Islami Bank Limited, South
Bangla Agriculture and Commerce Bank Limited) two are operating its agent banking
activities.
Table 6: No. of agent banking license receiving banks
Serial
no.

Name of the banks

License
approved
by BB

Operation started

Bank Asia Limited

May 2013

December 2013

DBBL

July 2014

January 2015

NRB Commercial Bank

Limited

May 2014

June 2015

Alarafah Bank Limited

June 2015

June 2015

Exim Bank Limited

June 2015

Operation is under processed

SABC Bank Limited

June 2015

Operation is under processed

25

Modhumoti Bank Limited

June 2015

Operation is under processed

Standard Bank Limited

June 2015

Operation is under processed

Social Islami Bank Limited

June 2015

Operation is under processed

Source: Bangladesh Bank/Authors Survey

Above table 6 show the banks which get agent banking license from central bank. The
present situation of agent banking is shown at a glance in following table 7. It shows the
agent banking activities are operated by banks, date of receiving license, year of
operations, instruments or terminals that are used in agent point or office, district coverage
of agent and customers.
Table 7: Agent banking in Bangladesh

Name
of the
banks

Bank
Asia

License
receive
d

May,
2013

Operation
started

December,
2013

POS with Thumb Reader

PC to run browser based

software by agent

POS with NFC card

reader

E-POS

DBBL

July,
2014

January,
2015

No. of district
coverage, agent
and customers

Terminals used in agent

office/ point

Districts: 20

Agents: 73

Customers:
15000

Districts: 11

Agents: 15 and
sub agents: 18

Customers:
4358

Desktops Apps

POS

ATM

Smart phone (In future)

26

NRBC
B

May,
2014

POS with thumb

impression (E-POS)

Smart phone apps with

quick reference card

Five UISC
surrounding
Dhaka

Agents: 05

Customers: 50

June, 2015

Source: Review Workshop paper presented on June 2015, at BIBM (Unpublished)

Presently, eighty three agent outlets are operating agent banking activities through five
divisions such as- Dhaka, Chittagong, Rajshahi, Khulna, and Rangpur. In Dhaka, there are
forty four outlets of agents are operating agent banking from twelve districts. Chittagong,
Rajshahi, Khulna, Rangpur has twenty, three, eleven, and five agent outlets in different
districts respectively.
Furthermore, Dhaka division gets highest preference to open an agent outlet, (See figure 3)
Chittagong is in the second position, Rajshahi, Rangpur, Khulna are in following position
to open a agent outlets. Most of the industries are situated in Dhaka and Chittagong; it may
be the reason that flow funds are more in these districts than other districts so agent outlets
are growing these areas rapidly.
Figure 3: Percentage of agent outlets among the divisions

27

53%

60%
50%
40%
Percentage

24%

30%
13%

20%
10%
0%

4%
Khulna

6%

Rangpur

Rajshahi

Chittagong

Dhaka

Divisions

Source: Websites of different commercial banks

This chapter mainly deals with the reporting of data analysis and discusses the findings
from data. The data involved the questionnaires received from respondents. Data analysis
was done according to questionnaire and the findings was then considered and discussed.
This research was conducted with a view to assess how agent banking activities are
practiced by the banking financial institutions in Bangladesh, to identify the prospects of
agent banking in Bangladesh and find out the challenges that may be considered as
opportunities or barriers to operate the agent banking activities in Bangladesh. The
respondents questionnaires were the main instrument of the study. The questionnaires
were given to the respondents which were duly completed and returned. The respondents
of the questionnaires were agents, customers and banks which are operating agent banking
activities in Bangladesh.

6.2 Age of agents

Banks select middle age people to give license of agent banking. From the respondents,
(See figure 4) 63% agents age is in 31 to 40 years. It is the group of people are energetic,
28

more trustworthy than young people. This group of people may have some banking
experience, not so much volatile in changing career. Banks provide agency those people
considering the long term banking, operational activities, and customer services.
Figure 4: Age of agents

63%

70%
60%
50%
Percent ageof Respondent

40%

25%

30%
20%

9%

3%

10%
0%

20-30

31-40

41-50

Above 50

Age Group of Agents

Source: Authors Survey

6.3 Educational background of the agents
It is evident (in figure 5) that most of the agents are graduates. It was found out that there
are no uneducated people who have invested in agency business. It is good indication for
banking sector because educated people can promote, influence the uneducated people to
bring them under the banking umbrella by providing best services on behalf of banks.
Those who have not completed primary education and those who have never been to
school or through any other form of learning have not ventured into the business since they
dont have required knowledge to do transactions on behalf of banks

29

Figure 5: Educational background of the agents

Source: Authors Survey, (April June, 2105)

6.4 Business hours of agent outlets
Bank agents deliver convenience by providing more working hours than the conventional
banks hours of business and through close proximity to the customers than would the
banks. Results indicated that agents were delivering additional hours and making services
available to bank customers beyond what the banks could deliver
Figure 6: Percentage of agents outlets business hours

Above 10 hours; 19%

9 to 10 hours

; 41%

6 to 8 hours ; 41%

30

Source: Authors survey

.Eventually, agents were opening longer hours than banks during the weekdays, holidays
(See Figure 6). Normally, agents were providing three to five hours more than the banks
branches.
6.5 Percentage of transactions through agent outlets in a day
There were 6 to 10 transactions taken place through agent outlets in day. (See figure 7)
There are some reasons behind that scenario. Firstly, rural people are more conventional to
accept new thing. Secondly, they are not used to doing banking because they think that
banking is upper class people. Furthermore, Mobile banking is getting more popular
among them. They do not want to think about other intermediaries to do banking. So, low
transaction profile through agent outlet is a problem for agents because they can not reduce
their fixed costs. Income from transactions is related with the volume of transactions. If it
is not increased, agents will be frustrated.
Figure 7: Percentage of transactions through agent outlets in a day

Above 20; 6% 0 to 5; 6%
16 to 20; 6%
11 to 15; 28%
6 to10; 53%

Source: Authors Survey

31

6.6 Factors that motivated to be agents

It was a matter of interest that what reasons that motivated people to be an agent are. There
were lots of factor involve in this motivation. Most of the agents have grocery shops,
constructions business, pharmacy, mobile phone shop or other business. They want to
associate with big brand for their reputation. It was the evidence that out of total
respondents 43% agents involved themselves with agent baking for attaching their name
with brand or banks. (See figure 8) Furthermore, 31% and 22% agents were motivated to
take agency due to transaction base income and employment.
Figure 8: Factors that motivated to be agents

I want to be associated with a big brand; 43%

For employment; 22%
Brings more people into my store; 4%
Transaction fee income; 31%

Source: Authors survey

6.7 Challenges to operate agent outlets
Availability of network as a challenge to agency banking in Bangladesh was mentioned by
32 (100%) of the respondents. (See figure 9) Power failure and system failure were
respectively 47% and 38% claimed by the respondents. Power failure and system failure
32

includes POS machine does not perform, Biometric Machine does not work, electricity
failure, electronic devices failure and so on. Some respondents claimed that they lost
money in road while depositing the money in bank branches and they were the victim of
robberies. Others includes operational tasks such as banks were reactive in events, mini
statements could not be provided due to lack paper, technological experts were not
available to put into affect the devices. Liquidity and capital were not considered as
challenges because the agent who got the agency from bank was financially sound. Most of
them have either enterprise, shops, pharmacy and so on.
6.8 Gender of customers
Respondents (specially customers) were characterized basing on their gender and level of
education. (See figure 10) In terms of gender, 32 respondents who covered 88% of the
respondents were found to be males while 13% were female
Figure 9: Challenges to operate agent outlets

Poor network connection

Power failure
System failure
Challenges

Robbery or Hijacking
Others
Sources of funds
Liquidity
0%

20%

40%

60%

80%

100%

Percentage

Source: Authors survey

33

Showing the different genders of respondents was important since it showed that both
genders were considered in this study and hence the sample was representative and hence
not biased.
Figure 10: Gender of customers

100%
80%
Percentage

60%
13%

40%
20%
0%

88%
Male

Female
Gender

Source: Authors survey

Showing the different genders of respondents was important since it showed that both
genders were considered in this study and hence the sample was representative and hence
not biased. It was evident that more males have involved in agent banking than female this
is because males were more economically empowered than women. Moreover, agent
outlets are situated in bazaars, markets which are normally male dominated place. In the
rural area of our country, females do not go to markets or bazaars in villages. So, it is
difficult for them to do banking through agent outlets in those areas.
6.9 Age of customers
Middle age people are more involved themselves in agent banking. From the respondents,
(See figure 11), 50% agents age are in 31 to 40 years. It is the group of people are
energetic, future leader. People open agent account considering the long term banking,
operational activities of banking through agent outlets behalf of branch. Above 50%
34

customers have completed higher secondary school education and 28 % have completed
secondary education level. (See figure 12) It indicates that educated people in rural areas
are coming under the banking umbrella.
Figure 11: Age of customers

41-50; 19%

20-30; 31%
31-40; 50%

Source: Authors survey

Those who have completed primary education and those who have never been to school or
through any other form of learning have not involved themselves in agent banking since
they dont have required knowledge to do transactions in banks.

35

Figure 12: Educational background of the customers

16%

Graduate

53%

Higher secondary
Levels of education

28%

Secondary
3%

Primary
0%
Never been to school

0% 10% 20% 30% 40% 50% 60%

Percentage

S
ource: Authors survey
6.10 Common services offered through agent outlets
BB introduced agent banking guidelines for all commercial banks aiming to provide
banking and financial services on a limited scale to the underserved population. BB also
issues permissible agent banking activities in agent Banking Guidelines. Although there are
lot of services permitted by BB, all services are not provided till today. Cash In, Cash Out,
Collection & preservation of A/C opening Form & others receipts copy are almost offered
in all agent outlets. Balance inquiry and fund transfers are also taken place in 97% and
91% agent outlets respectively. (See figure 13) 72% agents are providing issue of mini
statement and 13% agent are providing foreign remittance services. Although our country
earn huge amount of remittances, agent outlets can not grab the opportunity due to poor
promotional activities, long term strategies of banks.

36

Figure 13: Common services offered through agent outlets

Collection & preservation of letters

Collection of bills
Foreign remittance payment

3%
6%
13%
72%

Issue of mini statement

Services

91%

Balance inquiry

97%

Fund transfer
Collection & preservation of form

100%

Cash deposit and cash withdrawal

100%

0%

20%

40%

60%

80% 100%

Percentage

Source: Authors survey

6.11 Level of customers satisfaction regarding agent banking
Those people who have agent banking account, 59% of them have very good experience,
(See Figure 14) 28%, 6% have good and excellent respectively experience with agent
banking activities because agents can help fill in account opening forms in their remote
areas. They may inform the people of the benefit of depositing money in a bank account
rather than keeping hard cash at home. People in remote areas may hesitate to visit branch
premises or seek any information from customer care. But, they will feel homely when
they visit the local agents and the local agents also can help them accordingly.

37

Figure 14: Level of customers satisfaction regarding agent banking

59%
60%
50%
40%
28%
Percentage

30%
20%
6%

10%
0%

Good

Very good

Satisfactory

6%

Excellent

Level of satisfactions

Source: Authors survey

6.12 Customers trust on agent banking
It can be observed that 94% of respondents showed (See Figure 15) that customers have
trust while dealing with agents and the company the agents represent, while 6% said some
customers lack trust on them as agents and by extension the company they work for. Trust
issues are very critical in banking industry, customer account details must be kept private
and confidential to be able to earn trust. Some customers fear about the embezzlement of
fund because some Somobay Somiti, Co-operatives were made fraudulent activities with
them. On the other hand, Mobile banking becomes more popularity among the general
people. People associate the agent banking with mobile banking although those are
different from each other.

38

Figure 15: Customers trust on agent banking

No; 6%

Yes; 94%

Survey: Authors survey

The customers who have an account in agent outlets want better services from agent
outlets. If customers get better services than other forms of banking specially in rural area,
they will include themselves in banking sector which is ultimate target of agent banking
directed by central bank. Higher the people includes in the formal banking sector, it will
make higher contribution of banking sector in our economy.

39

Chapter Seven
Findings, Recommendations and 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. The study comes up with
the following observations and recommendations.
One, the goal of agents is to make profit from the transactions. But, the lower volume of
transactions creates barriers to make them successful. According to the discussion with the
agents, agents are, most of the cases, involved with other types of business such as retail
shops, pharmacy, grocery shops. They operate shops and agent outlets simultaneously. As a
result, agent outlets do not provide better services or promote agent baking efficiently to
the people. Hence, it decreases the chance of making profit more.
The BB may encourage banks to go for agent banking. Commercial banks, on the other
hand, will have to plan and execute agent banking Banks should recruit and maintain high
quality agents to increase the reputation and promotion of agency banking. Banks should
go through intense campaigns or advertising of creating awareness to the customers and
the public in general is aware of these services. This can be through public awareness
campaigns, brochures and other programs as the nature of the institutions products may
require.
Two, According to the survey, it has been observed that agents have good educational
background or above fifty percent of them are graduate. But, the alarming issue is that they
are not directly involve in the outlets rather they appoint other persons who have not
adequate knowledge about agent banking as well as banking activities. In this regard, bank
should come forward to maintain the agent outlets efficiently. Banks may give proper
40

training to agents or agents' employees as to how to handle IT-related issues and deal with
customers effectively and efficiently. Otherwise, it hampers the reputation of banks as well
as reputational, operational risk will increase drastically.
People in remote and semi-urban areas are usually reluctant to use technology. They are
not habituated to use any card or Point Of Sale (POS) device. Banks may develop any
effective promotional plan to reduce this reluctance. Banks may arrange demonstration of
POS use in the localities. Banks should educate the customers and people on how best and
easy way to use the instruments.
Three, transactions through agent outlets are not satisfactory level. Rural people are more
familiar with mobile banking than the agent banking. They are not aware about the benefits
of the agent banking. Agents can help fill in account opening forms in their remote areas.
They may inform the people of the benefit of depositing money in a bank account rather
than keeping hard cash at home.
The agents efforts are not only sufficient to promote agent banking to the rural people but
also commercial banks need to give more emphasis to bring the rural people under the
banking umbrella. Agents are locally-known community leaders and trusted. Their
reference and marketing can boost assets and liability of a bank. Their reference is more
effective than a third party deployed for marketing.
Four, according to the survey, agents involve in agent baking to associate them with large
organisations or banks for their reputations. On the employment point of view, it creates
more employment as well as brings unbaked people to the bank arena. It is also a matter of
consideration that each and every agent has their own business to do. So, the agents may be
less attentive to banking services. History of business, personal reputation and leadership
of the store owner concerned within the community should be checked before selecting an
agent.
Agents should not offer limited services to customers such as access their bank accounts
and transfer money. They should allow a wider range of services which are necessary for
people living in the rural areas. In this regard, Banks should contact with agents regularly
41

to find out gaps between performance and expectations of services. If any gaps or
performance are not matched with expectation, immediate action must be taken by taken to
provide better services to satisfy the customers.
Five, availability of network, power failure, system failure, robbery, technical problem of
devices, lower promotional activities, few interest of people regarding agent banking are
the major challenges faced by agents and banks. People in remote and semi-urban areas are
usually reluctant to use technology. They are not habituated to use any card or point of sale
(POS) device. Banks may draw up any effective promotional plan to reduce this
reluctance. Banks may arrange demonstration of POS use in the localities. Banks need to
be proactive in facing any adverse incidents. Banks should inform the agents regarding the
network problem prior to the occurrences.
Banks will have to set long term strategic plan and a short-term plan as well as establish
an agent banking network comprising IT experts, Financial analysts, Marketing people.
The bank should focus on proper training, development and motivation of agents.
Six, agents in rural area are not willing to provide all services which are pointed out in
agent banking guideline. They are not providing Cash payment under government social
safety net program, Cheque receive for clearing, Facilitating small value loan disbursement
and recovery of loan installments, passport fee collection and so on. Agents need to go
branch regularly as a result their communication costs, operational cost increase.
Therefore, they do not want to provide all services directed by central bank.
Banks should ensure that safety and soundness of the banking system especially Agent
Banking Services. These services are needed to provide banking services at a lower cost
and to foster financial inclusion. Banks must ensure the confidentiality and security of any
customer information in the agent's possession.
Seven, the bank has less control over the customer experience at the agent than at its own
branch, for two reasons. First, the agents staff is not subject to the same selection
standards and training as branch employees. Second, in a retail store, the agent business is
sitting alongside a set of other retail products and propositions beyond the banks control.
42

Under these circumstances, the bank should maintain a record of incidents reported at
each agent, with a view to identifying suspicious patterns and monitoring service quality.
Banks need to be cautious about agent activities because banks reputation is tied up with
the agent while approving agency. Banks needs to examine and consider the security of the
place prior to select an agent. Banks should also consider the rate of theft or robbery in an
area before selecting an agent. If needed, banks can also arrange an insurance coverage.
In addition, banks may have written and pictorial instructions and those should be placed
at visible places inside any agent bank to make customers aware that no transaction is
completed without an automated printed receipt.
Finally, agent banking will be successful and its goal will be reachable if aforementioned
challenges can be faced efficiently and effectively by giving our hand. But, this is not that
much easy as it appears to be. If Challenges can be handled in strong hand, agent banking
creates new era of financial inclusion in the banking sector of Bangladesh. Agent banking
can add motivation to financial inclusion if the BB along with commercial banks can
express the power of agent banking properly. To create long-term resilient and sustainable
economic, social and environmental values as well as strengthening the financial system of
the country, Not only the BB should have a vision regarding this but also banks need to
have their vision, mission, goals and objectives, which must fulfill the need and
requirement of their new customer. Agent banking can contribute in large scale by
including unbanked people into the banking arena if central bank and banks in Bangladesh
go hand in hand.

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43

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