Appeals for agency banking law

February 13, 2017 in Business, Finance, Financial Services, Policy by Editor

February 13-The government has been asked to quicken legislation on the Agency Banking regulations which would allow for financial institutions to extend their services further afield without incurring the costs involved in setting up permanent facilities.

Overhead costs in terms of renting premises, is a major strain on banks’ expenditure. “Government has been sitting on the Financial Institutions Act which provides for Agency Banking for the past four years and yet it has enormous benefits for the Banking Sector,” Patrick Mweheire, the Chief Executive, Stanbic Bank Uganda said.

He said, “Like other sectors, the banking sector has been experiencing high costs of doing business amidst the tough economy, but with Agency Banking, we shall be able to see some cuts across the sector.”

Speaking on the sidelines of the Stanbic Bank Uganda  Economic Outlook Breakfast, Mweheire said when finally assented, the proposed provisions would help cut the costs of doing business. Increasing financial inclusion was one of the major points of discussion during the forum.“About 25 Stanbic branches lose money, but you cannot just come out and close them,” he said.

Mweheire said, “With banks, you need a minimum of 12 people, a strong-room and many more requirements for you to operate, which push up the cost of production. But with Agency banking, all you need is an agent with an available room to transact business. Agency Banking shrinks all those costs as one person is able to do the job done by a financial institution,” he said.

He said Stanbic has already identified 1000 agencies with whom they will transact business across the country once Agency Banking is legalized. This is also expected to give the commercial banks more mileage as they will be able to penetrate in areas where they have not had physical presence at minimal cost.