United Bank S.C. and Dashen Bank S.C. are ready to launch agent banking service after acquiring license from the National Bank of Ethiopia (NBE) last week.

Commenting on the development United’s President, Taye Dibekulu, said United, alongside with Dashen, has become the first bank to start the service in Ethiopia.

National Bank’s directive defines agent banking as a system that allows banks to give agency to non-banking institutions to conduct its formal banking businesses with exception of giving loans. The system facilitates transaction as well as payments to be issued for customers. The agents are allowed to make payments as much as 25,000 Birr per day.

The system has a merit of enabling banks to reach their customers at a low cost for the bank should not necessarily open a branch which requires investment. NBE’s directive allows any legally registered institution carrying out trade activities can receive agency and render the service. Nonetheless, the directive prohibits religious institutions, non-profit making organizations and foreign entities or those which are fully or partly owned by such entities from becoming agents of banks.

United’s President explained the merit of the system saying, it will enhance for banks to get to residential areas when compared to ATMs which seem to be limited to city-centers. The system can be operated by supermarkets, malls, pharmacies and shops to ease the need to go to banks to get the services, Taye added.

He furthered introducing the system will play a crucial role in promoting the country’s banking system. In addition to this the system will enable people to have cash payment which other modern means in banking do not.

Source: The Reporter