This, it is expected, would see some banks changing to models of gathering large volumes of deposits, resulting in low costs and stable funding.
In a statement to ‘Daily News’ in Dar es Salaam, the Bank of Tanzania took the major step to reach to unbanked population by issuing Guidelines on Agent Banking for Banking Institutions.
“This will enable banks across the country to earmark individuals or smaller institutions to act as their agents, starting February 1, this year,” the central bank said. It added that the guidelines are part of the actions taken by the industry regulator towards achieving the vision of an inclusive financial system that ensures all members of society, including the underserved, have access to and usage of quality and affordable essential financial services.
“Agent Banking, which is the use of retail outlets by banking institutions to deliver financial services, has been an additional delivery channel that can enhance the convenience and outreach of quality and affordable financial services, particularly to the underserved in a more cost-efficient manner,” it noted.
It noted the Guidelines are intended to create an enabling regulatory environment to promote financial inclusion and ensure safety and soundness of the individual banks that will engage in agent banking business and the entire banking system. Currently, many banks have concentrated on fighting for big customers especially in towns without focusing on the potential of people in rural areas, with research indicating only 15 per cent of Tanzanians have bank accounts.
Banks and other providers now recognise the potential of reaching millions of prospective customers, especially the rural population who account for over 70 per cent of the rural population.