The push for agency banking continues to gain momentum as Bank of Uganda (BOU) fast tracks the amendment of the Financial Institutions Act 2004 writes WINNIE MANDELA.
According to Louis Kasekende, the BOU Deputy Governor, the basic principals of the law are already in place.
The agency banking model permits third- party agents to represent commercial banks in dealing with customers. It allows lenders to offer banking services like loan applications, depositing and withdrawing cash, at locations such as supermarkets, shops and fuel stations.
“There are only six million accounts in commercial banks in Uganda spread across the 26 banks, this numbers are still low. The agency banking model will ensure that banks reach out in those hard to reach areas outside Kampala,” Kasekende said last week.
“Once the bill is passed into law we will be able to hook supermarkets, shops, telecoms or mobile shops into the bank. Our customers will not need to physically visit out branches,” Joram Kiarie, the Managing Director KCB Uganda said.
The proposals will now go back to Cabinet and then the legislators for amendment to provide for Agency Banking, Banka Assurance and Islamic Banking law.
While speaking during the official openings of new KCB branches at Forest Mall and Kikuubo market in Kampala, Kasekende said fast tracking amendments to the present law, is one of the actions BOU is taking to improve access to financial services across the country.
This partnership between financial institutions and agents is expected to help financial institutions take services closer to people, and more importantly, to areas that lack them.
Agency Banking is already in operation in the neighboring Kenya and Tanzania. According to Kasekende, it is expected to deepen financial inclusion in a country where only 20% of the adult population saves with supervised institutions, whereas, 80% save using unsupervised institutions like mattresses and boxes.
Source : East African Business Week