Kampala — Bank of Uganda (BoU) is likely to approve bank agents in two weeks, BoU director for commercial banking Benedict Sekabira has said.
"We are now at agent agreement and this has to be in line with the regulation, which is done by BoU. We are about to complete it and once the agreement is perfected, within a fortnight, we shall approve the agents whose list we got," Mr Sekabira said.
He was speaking last week during a breakfast meeting where the Central Bank, Centenary Bank and other stakeholders were discussing agency banking. The meeting held in Kampala aimed at creating awareness about agency banking.
So far, BoU has received applications from four banks and is relying on assessment made by banks to give necessary approval to agents.
Recent changes in the Financial Institutions Act (2004) are enabling banks to adopt agency banking.
Agency banking permits a commercial bank to appoint a third party (agent) to transact business on its behalf.
The agent can be a sole proprietor, in a partnership, a cooperative or microfinance institution approved by BoU. Once the model takes off, agents will earn commissions on transactions made.
Over the years, there has been growth in financial services but access remains limited.
The banking sector has experienced a number of changes as a result of technological advancement and there has been a shift in the way financial institutions serve customers.
With agency banking, customers will be able to open bank accounts, withdraw cash, access account balance, transfer money and pay bills without going to a bank's branch.
Statistics show that there are six million bank accounts.
Centenary Bank holds 25 per cent of the accounts.
Mr Fabian Kasi, the bank's managing director said with agency banking, the bank is targeting to grow its clientele to 4million in the next two years.
The bank intends to acquire over 10,000 agents countrywide by the end of the first year to achieve its target.
Agency banking is expected to significantly contribute to financial services and expand opportunities to rural households and small and medium enterprises.
Besides enhancing financial inclusion and bringing down cost of operations for banks, Mr Kasi said, agency banking is expected to lower bank interest rates.
"Definitely, once we make savings and have our costs down, we believe we should be able to share those savings with the clients by way of reduced interest rates," Mr Kasi said.