Though a lion's share of agent banking accounts are owned by people living in rural areas, they are deprived of access to loans even after a surge in deposit amounts.
In the year to March, only Tk14 had been given in loan against Tk100 in deposit in the agent banking, whereas the loan-deposit ratio in the banking sector was about 73% meaning Tk73 was disbursed as loan against deposit of Tk100.
A year ago, borrowers in agent banking got only Tk8 on an average in loans against a deposit of Tk100. Alongside the increase in loan-deposit ratio, loan distribution more than tripled by March this year, according to the quarterly report on agent banking released by the Bangladesh Bank.
During the one-year period, the number of accounts in agent banking surged to 1.10 crore, with Tk17,822 crore deposited in them.
Only Tk2,501 crore was disbursed in loans. Of the amount, more than 35% was given in urban areas, with the rest in rural areas.
Ali Reza Iftekhar, chairman of the Association of Bankers, Bangladesh and managing director of Eastern Bank, said the negligible loan distribution indicated that money taken from rural people was being used in urban areas.
Deposits from people living in rural areas should be used for rural development, increasing economic activities in those areas, he said, adding that the whole economy would be benefited from that.
Reza said the outlets of agent banking or agents were mainly busy collecting deposits. They are not capable of disbursing loans.
Banks cannot rely on these agents. To expand loan distribution, banks will have to open up local branches but that involves costs, Reza said.
He, however, expressed hope that by the end of this year loan distribution would reach 25% of the deposited amount.
The BB report said the increase in the number of accounts showed rising public interest in agent banking. The number of women account holders had also gone up, indicating women's participation in the mainstream economy, it said.
In one year through March, remittance flow through agent banking climbed up by a whopping 200% to Tk58,400 crore.
BB said the 2% government incentive and an additional 1% incentive given by some banks had resulted in the jump in remittance flow.
By the end of March, 27 banks deployed 12,345 agents to provide services of agent banking through 16,421 outlets.