Bangladesh Bank on Monday issued guidelines on agent banking, barring loan defaulters from getting licence to operate the services.
Through the guidelines, the central bank also asked the managing directors and chief executive officers of all banks not to allow any person, who is convicted by a court of law, to get the licence before three years after completion of his/her sentence or penalty.
The persons, under investigation for any criminal charges and money laundering or terrorist financing activities, will not be allowed to get the licence.
The central bank also specified the financial services which will be offered by the owners of agents to the clients.
The clients will be allowed to deposit and withdraw cash, receive the inward foreign remittance through the agent banking.
The agents will be allowed to disburse loans to the clients on behalf of a bank and the clients will also repay the loans through the system.
The agents will be allowed to give services including collecting utility bills, insurance premium, payment of retirement and social benefits, payment of salaries, transfer of funds, balance enquiry, generation and issuance of mini bank statements, collection of documents in relation to accounts.
The clients will be able to collect account opening forms, loan application forms and credit and debit cards’ application forms from the agents.
An agent will not enter into agent banking contract with more than one bank, according to the guidelines.
The agents do not have to operate or carry out an electronic transaction when there is communication failure error in the system.
The agents will not carry out a transaction when a transactional receipt or acknowledgement cannot be generated.
The board of directors of the bank will be responsible for approving the bank’s agent banking operation strategy and relevant policies.
The board will be expected to take an explicit, informed and documented strategic decision as to whether and how the bank will provide agent banking services to its customers.
The board will ensure that the bank has security control policies to safeguard the information, communication and technology systems and data from both internal and external threats.
Bank’s internal auditors will be responsible for assessing adherence to the policies, rules, regulations and operational guidelines.
Internal auditors need to incorporate risk-based review of critical agent banking processes to ensure that the policies, rules, regulations and the operational guidelines are followed and should escalate significant exceptions to the audit committee of the board of directors.
Internal auditors will also be responsible for assessing the adequacy of controls of outsourced activities by taking appropriate direct or third party audits of the same as mandated under relevant outsourcing agreements.
A bank will have to carry out risk-based customer due diligence to ensure that requirements of anti-money laundering are not compromised.
The Know Your Customer (KYC) requirements, transactional limits and minimum technological security requirements that are applicable to each level of account will be subject
of the review process by the BB at the time of seeking approval to engage in agent banking activities.
To establish agent banking services outlet, banks will give priority to areas where bank branches or other forms of formal banking services access points are not available.
Banks will give preference to such places for establishing new agent banking outlets where there is no bank branch or agent point within one kilometre radius.
The banks will give priority to remote rural areas, chars, islands and other geographical areas with limited accessibility.
Agent banking outlet will be distributed equitably among various districts with preference to districts with less financial access points.
The banks should maintain a minimum ratio of 3:1 for rural and urban agent banking outlets.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Banking