Number of Branchless Banking Agents Crosses 400,000 in Pakistan

The number of branchless banking agents continued to surge throughout the country and crossed 0.4 million at end of July, 2017.

According to State Bank of Pakistan (SBP), the number of branchless banking agents grew to all time high level at 402,710 throughout the country, which includes customers care offices of mobile phone companies, franchises of mobile phone companies, pharmacy, mobile accessories shops, groceries and retail stores.

In the outgoing quarter, a new branchless banking was introduced by JS Bank named JCash which also added more than 30 agents in its network.  

Unfortunately, the active branchless banking agents are less than 50 percent, and stand at 185,297 as per the figures of central bank. This phenomenon persists in the sector because branchless banking agents are associated with multiple branchless banking companies at a time.

The central bank allowed independent agents to offer services to their customers on the network of various branchless banking companies.  Hence, the overall agents of branchless banking are counted twice or even more times. 

These agents are allowed to have subscriptions of two branchless banking companies in urban areas and three in rural areas but the permission is usually exploited in cities, unfortunately, and agents exploit companies to use their services against asking margins.

There were many reports of overcharging by retail agents from customers in the sector as many of the independent agents are not tightly regulated by the companies. Last year, the central bank penalized more than 2,000 agents to set one precedent of strict regulation but this need to continue in the future for better quality of the services.

Future Outlook

As the number of branchless banking agents are now in double digits at 11, the prevailing cutting-throat competition will be more intensified in the sector and could result in increasing power in the hands of agents.

The number of agents should be increased by these companies through training of new agents instead of acquiring an existing one to save money and time. Particularly, these companies should explore their agents in untapped, rural and far-flung areas to benefit masses for using banking and financing services of their needs.

In the current financial year 2017-18, the government accepted demands of the sector while giving exemption of tax to branchless banking agents for withdrawal of withholding tax.

Now, companies should scale up their network of branchless banking services especially through retail sector to broaden the base of the agents in the country. On the other hand, the central bank should review the policy of allowing agents to have multiple services at the point-of-sale through city-wise and area-wise demand.