Sixty percent of bank agents are yet to break even despite the growing popularity of the alternative banking service among the unbanked people in the rural areas, according to a study.

Agents usually do not receive any commission for disbursing funds of the government's social safety net programmes. Moreover, they have to bear marketing cost to popularise the service.

These came in a study titled "Addressing market demand through agent banking: lessons learnt", carried out by MicroSave Consulting, a global consulting firm, with support from the Business Finance for the Poor in Bangladesh (BFP-B), a programme of the UK's Department for International

Development to promote micro and small enterprises.

The research paper was presented at a seminar styled "Future of banking: Agent banking as alternative delivery channel to reach the last mile" organised by the BFP-B at the Lakeshore hotel in Dhaka yesterday.

The number of agents grew 74 percent in the span of a year to 4,493 in 2018.

The study found that agent banking was getting popular among the rural people as the payment channel was much cheaper than mobile financial service (MFS). The cash out charge through the MFS is almost 2 percent whereas it is zero to a maximum 0.5 percent in case of agent banking.

Agent banking's cash-in and cashout limit is 25 to 30 times higher compared to that of MFS platforms.

Average daily transaction value of an agent is Tk 360,000, according to the study.

An agent requires an initial investment of Tk 5 lakh to Tk 8 lakh in rural areas and Tk 8 lakh to 10 lakh in urban areas, according to the report. One-third of the agents face liquidity problems once in two weeks, the study found.

"The agent banking has brought the unbanked people under banking services in the rural areas which was not possible through the traditional branches of banks in the last 40 years," said Ahmed Jamal, deputy governor of the central bank, while addressing the seminar.

He said there should be some commission for the agents so that the service becomes commercially viable.

Md Nazimuddin, an executive director of Bangladesh Bank, said the agent banking was effective for inclusive financing in the rural areas and it was now providing a number of services, including utility bill collection, remittance transfer etc.

Md Arfan Ali, president and managing director of Bank Asia, said the agent banking was really effective

for marginalised people, who were not under banking services in rural areas.

"We are yet to provide full benefit to the unbanked people because of some constraints," he said.

Shortcuts should not be followed in selecting agents to avoid unexpected complexity, he said.

Rashed Al Hasan, policy manager of the BFP-B, said agent banking should be used to pay salaries and make utility bill payment to ensure the commercial viability of the alternative banking service.

The central bank awarded agent banking licences to 20 banks as of June last year. Of them, 19 have already started operations.

The number of agent banking accounts was 24.6 lakh last year, out of which 87 percent were in rural areas.