Agent banking was not a central feature of the country’s financial system when Bangladesh Bank rolled out guidelines for implementing the service in December 2013.
And although local lenders waited until 2016 to adopt this tool, it has since facilitated brick-and-mortar banking in remote areas, where geographic and cost constraints once prevented their physical presence.
This is because it provides commercial banks with the scope to deliver services through retail agents, thereby driving financial inclusion.
So, for years it was only treated as an alternative delivery channel for bring-and-mortar banking. However, that role no longer reflects the regulatory framework or operational reality of agent banking.
Through the circular on December 9, 2013, the central bank’s Payment Systems Department (PSD) made it mandatory to carry agent banking transactions through ICT-enabled devices.
Additionally, “PSD Circular No 5 (2013)”, said agent banking transactions must be integrated with lenders’ systems without interruption, with their details reflected in real-time in the Core Banking Solution (CBS).
It further said that every transaction would have to be processed using biometric authentication, posted instantly to the CBS and confirmed to the customer via system-generated receipts. Also, no transaction is permitted during a communication failure.
Under this regulatory framework, agent banking was never intended to function outside the core accounting structure. So, what changed is not the regulatory intent, but the scale and centrality of the model.
Today, agent banking performs functions that sit at the heart of retail banking. For millions of customers, particularly outside major cities, agents are no longer a secondary option; they are the primary interface for bank-led services.
Cash withdrawals, remittance disbursements, bill payments and small-value savings transactions are executed daily through thousands of outlets – all as live entries within core bank systems. As such, this shift requires a change in how agent banking is viewed.
The distinction between “core” and “non-core” banking is no longer about physical branches or permanent infrastructure. It is about function and systemic impact.
Core banking functions are those that handle high-frequency transactions, carry deep customer trust and influence liquidity flows. By regulatory definition and operational design, agent banking in Bangladesh already meets these criteria. Scale is what alters the risk profile.
When agent banking networks were smaller, operational failures remained local. As networks expanded to cover nearly every union, the same types of disruptions began to affect entire communities.
When system connectivity fails, transactions must legally stop. When an agent’s liquidity (float) is constrained, customers cannot complete otherwise valid CBS-integrated transactions.
These interruptions do not occur on the periphery; they represent a functional suspension of core banking services for the affected population.
Core banking is also defined by absolute accountability. In branch-based environments, responsibility is concentrated and visible. Agent banking distributes execution across thousands of points, but liability remains legally anchored with the bank under the principle of “Principal Liability”.
PSD Circular 5 leaves no ambiguity: the bank must bear all the liabilities arising from any improper action on part of their agents.
Field reporting nevertheless shows that customers can struggle to resolve disputes originating at agent points. While banks are required to provide grievance redressal mechanisms, the escalation path in practice can be obscured for users with limited literacy.
These challenges are not evidence of regulatory gaps, but of enforcement and communication gaps within a system that now carries a massive share of the national retail load.
Another reason for this examination lies in liquidity management at the “edge” of the system. Although transactions are processed digitally in real time, the physical availability of cash at agent locations directly affects service continuity.
When agents cannot meet cash demand, the digital integrity of the CBS is undermined by physical constraints. This exposes operational dependencies that matter significantly on a national scale.
Supervisory frameworks were originally developed around branch-centric models. Applying the same intensity of oversight to thousands of dispersed, CBS-connected agent points requires advanced digital supervisory tools, stronger real-time monitoring through Bangladesh Bank’s integrated systems, and sustained enforcement.
The challenge is no longer whether rules exist, but whether they can be applied consistently and visibly across a rapidly maturing network.
Although agent banking was conceived as an access solution, it was designed with the rigor of core banking from the start. So, considering the scale of agent banking operations today, recognising it as a structural component of the banking core is not a semantic exercise.
Instead, it is a necessary step in aligning oversight, accountability and public trust with the reality of how local banks operate in the 21st century.
