Business, Front Page

Agent banking replacing Hundi

Published : 09 Dec 2020 10:25 PM | Updated : 11 Dec 2020 06:15 PM

Agent banking is playing a big role in the all-time record remittance inflow, staying beside the people during the Covid-19 crisis.

Remittance stood at Tk 22,801 crore through agent banking in the first nine months of the current year, according to Bangladesh Bank data.

The flow through agent banking was Tk 15,534 crore last year.

In the first three months of the current year, the remittance inflow increased to Tk 11,685 crore through agent banking.

Bankers said in the past, customers had to come to a bank branch to receive remittances. Many expatriate families felt uncomfortable coming to the bank branch to take money due to distance, and physical and financial risks, they added.

As a result, ‘Hundi’ traders took advantage of the situation, bankers said adding, hundi traders who recruited some people who used to send the remittances to the expatriate families.

Now the agents of the banks have reached the markets next to the houses, market analysts said. 

As a result, expatriate family members are able to withdraw remittances safely, they mentioned.

They said in many cases the agents are delivering the remittances to the beneficiaries' homes. 

As part of the move, agent banking has gained popularity among expatriates, which is playing a significant role in the growth of remittances, they added.

At the same time, ‘Hundi’ activities have almost come to a halt, they mentioned.

Md Arfan Ali, Managing Director and CEO of Bank Asia, told Bangladesh Post, “The spread of agent banking is playing an effective role in stopping the activities of illegal hundi.” 

The agents are delivering the money sent by the expatriates to their relatives, he mentioned.

This has reduced hundi activities in remote areas of the country, he added. 

Ali said agent banking has generated huge jobs by creating young entrepreneurs and contributing significantly to uplifting the rural economy.

Dr Atiur Rahman, a former governor of Bangladesh Bank, said, agent banking is playing a vital role in ensuring the economic growth by expanding financial inclusion in delivering banking services to remote areas across the country.

They say this new mode of banking transaction has become a blessing for the country's economy during the Covid-19 pandemic, when people are avoiding travel.

It also helps increase remittance by encouraging expatriates to send their hard-earned money through legal channels, instead of illegal ‘Hundi’, Dr Atiur said.

The remittance inflow has shown a record growth to stand at $19.51 billion in the first five months of the current fiscal year, up by 75 percent over the same period of that in the previous fiscal. 

In agent banking operation, agents hired through agreements offer several banking services on behalf of the banks they work for. 

The services include cash deposits, withdrawals, account opening, account inquiries, remittance disbursement, small-amount loan disbursement, loan recovery, fund transfer, and allowance disbursement under the government's social safety net programmes.

Agent banking was introduced in Bangladesh in 2013. 

According to the Bangladesh Bank, 28 banks have taken licence for running agent banking and 24 of them have launched the service so far.