Agent Banking – Who needs it and why?
Bill Gates once said – The world needs banking, but it does not need Banks. Maybe that quote was taken a bit seriously by Banks, and we do see phenomena of Agent Banking happening! Why is Banking a Need? What are the advantages of banking services? Does it help people? Let’s take a closer look onto the rewards offered by banking –
Who needs Banking? Who are the probable beneficiaries of Banking Services?
Does banking belong to the elite group? Or is it for a labor working all day in a factory? Banking is needed by one and all! Unfortunately, the rural class has minimum access to banking services than the people living in the urban areas. For simple reasons like –
For couple of these reasons Banking is a DIRE NEED for people in rural areas where
How Agent Banking is affecting the Social and Economic Conditions ?
Opening a Savings Account in India
Let’s pick an example, Arvind who is a farmer and the head of the family has three kids, one studying in college, and other two in school, his wife a homemaker has a monthly income of 5000 INR.
|Type Of Expense||Amount|
|Kids School Fees||500/-|
|Kid College fees||1000/-|
Opening a Bank Account – The bank accounts now offer a minimum of 4 % interest rate with minimum balance of 2500 /-, so assuming he saves the amount for 2.5 months he could open a bank account that would earn him a minimum interest of 100 /- annually.
And if we compound the savings say
Money deposited every month = 1000 /-
Interest Rate = 4 %
Time = One year
|Year||Year Deposits||Year Interest||Total Deposits||Total Interest||Balance|
Effective Annual Rate = 4.06 %
Opening a Fixed Deposit in India
Minimum Fixed Deposit could be made of Rs 1000 for 15 days. Say Arvind opens a
Fixed Deposit of 10000 /- at an Interest rate of 6 %.
|Principal||ROI||Period||Frequency||Maturity Value||Interest Earned|
|10000 /-||6%||One Year||Compounded Quarterly||10613.64 /-||613.64/-|
Other Investment Strategies
How about Arvind starting a SIP [that usually has a minimum value of 500/- or 1000/-] to see his money grow?
Indeed this would be bit hypothetical as not all agents would have enough SIP options to their customers.
Availing Loan Facility
Just in case if Arvind needed to buy equipment for his farming or need money for his kid education, or his kid wants to start a business over internet he could also avail a loan from the Agents, at quite low-interest rates making it a fair deal!
So we saw with some basic facility and with the power of compounding, the rural areas would have a positive effect. They would not only gain financial independence but would also assist them in making an intelligent and informed decision about money.
By bringing banking services closer to the customer, it is saving a lot of time, providing employment to the youth, opening doors to start a business and above all educating people on how money could grow with time.
Indeed many of the researchers and studies have clearly shown that as agents gain more power and cover more geography it would help in providing more exposure to the customers.