BB sets limit on agent banking

Star Business Report

Bangladesh Bank yesterday set the maximum transaction ceiling at Tk 25,000 for agent banking
customers, it said in a notice. An agent banking customer will be able to make a maximum of four
transactions a daytwo withdrawals and two deposits. Besides, each bank has to maintain a current
account with the agent and the balance on that account may not cross Tk 10 lakh, it said. However,
the limit on the transaction value will not be applicable for withdrawal of inward remittance, it
added. Agent banking is a new concept in Bangladesh, but practised globally as an important
distribution channel for financial inclusion through agents of the banks. BB introduced agent banking
guidelines for all commercial banks in December, aiming to provide banking and financial services
on a limited scale to the underserved population. Cash deposits can be collected in addition to cash
withdrawals and fund transfers through agent banking. However, the ceiling will be determined and
revised by BB from time to time. Other activities of agent banking include inward foreign remittance
disbursement, small value loan disbursement, recovery of loans and installments, utility bill payment,
cash payment under social safety net programs, and other regular banking activities. With approval
from the central bank and agreements with a commercial bank, nongovernmental organizations, retail
shops, micro-finance institutions, cooperative societies, post offices, and courier and mailing service
companies can perform banking transactions on behalf of the bank, without charging the customers.
Customers will not be charged directly by the agents for the services but banks will pay reasonable
fees or commissions to their agents. However, banks may charge commissions or fees or charges
applicable to its customers. All transactions need to have an insurance policy and be in only takas,
according to the guideline. Agent banking transaction must take place outside the metropolitan, city
corporation or municipality area.

Published: 12:00 am Tuesday, March 25, 2014








Analysis of the News:
Agent Banking means providing banking services to the bank customers through the 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 the concerned bank. With a view to ensure the safety,
security and soundness of the proposed delivery channel Agent Banking Guidelines have been
framed by the Bangladesh Bank to permit banks to engage agents subject to compliance with the
guidelines. The purpose of these guidelines is to provide regulatory framework for Agent Banking
which will create an enabling environment for offering financial services to the new targeted group,
basically the people in the remote area. It will also ensure compliance with Anti-Money Laundering
and Combating Financing of terrorism set by Bangladesh Bank.
Recently Bangladesh Bank has given some directives for operating Agent Banking. It is said that
every agent must have a current account with the bank concerned where maximum available deposite
will be tk 1.0 million.
A customer can deposit or withdraw maximum Taka 25,000 in cash each time and such withdrawal
and deposit can be made maximum twice in a single day. This requirement is basically done for
combating the money laundering. But this limit will not be applicable in case of withdrawal of
inward remittance.
No "bank related people" will be appointed as agent and agent banking will have to be conducted in
rural area out of the preview of Metropolitan, City Corporation and Pourashava. The people of
remote and geographically separated areas would be the target of agent banking, as the regular
banking is not yet possible in that areas considering business aspects. Banks must submit sample
copy of agreement to be signed with agents, business plan about agent banking including business
continuity plan and guidelines approved by the board of directors about agent baking. Bangladesh
Banks Payment System Department will give banks approval letters under which banks will be able
to appoint agents as per its policy. For supervising the agent banking operation, the list of agents and
copies of agreement and other relevant papers must be sent to Green Banking and CSR Department
of the central bank.
Customers should not be charged directly by the agents for providing services to them. Bank will pay
reasonable fee or commission to their agents. However, the bank may charge charge commission or
fee as applicable to its customers.
Rational for agent banking is that reaching poor clients in rural areas is expensive for financial
institutions since transaction numbers and volumes do not cover the cost of a branch. The bank, agent
and client are benefited with this agent banking.