Microfinance Institutions are set to embrace a new form of banking dubbed, agency banking, in order bring services closer to people, especially in rural areas.Faustin Zihiga, the president of Association of Microfinance Institutions of Rwanda (AMIR), says that MFIs are in a better position to venture into agency banking to increase rural financial inclusion."I think it will help revolutionalise the whole savings mobilisation and money transfer processes,” he said during the Association’s Annual General Meeting held in Kigali on Friday.Agency banking means that a financial institution contracts a retail or postal outlet to process clients’ transactions. Some commercial banks, mainly Equity bank are opting for agency banking as opposed o the conventional way, where banks operate their own branches.  Banks and MFIs are opting for agency banking to help cut costs that are associated with operating branches.Zihiga notes that MFIs will either opt to carryout agency banking on their own or become agents for banks, depending on their capacity."I think that way, we will be reaching out to many people and using the available resources more efficiently,” he addedThe move is expected to boost the financial portfolio for MFIs and also position them to avail financial products that are tailored to rural folks, which is still an impediment to bringing more people to the banked population.Figures from the central bank show that MFIs registered total deposits of Rwf46.5 billion last year and issued loans worth Rwf42.5 billion. Their assets increased by 12.1 per cent in total assets up from Rwf43 billion in 2010 to Rwf48.2 billion last year.Despite growth, MFI customer are enduring high borrowing rates while the industry is still challenged with poor credit management practices, which leads to high default rates. Interest rates in MFIs hover between 16 and 24 per cent, which experts say are high for low income earners mainly farmer who are the major clients for these institutions."We have a long way to go in regard to reaching out,” Zihiga said, adding that "there is need to educate MFIs to adapt to the capacity and abilities of the population and also educate people on how to use banks.”He noted AMIR has launched a comprehensive training program for MFIs to strengthen management capacities and improve performances. More than 3,000 MFI workers were trained since the beginning of this programme.  Patrick Birasa, Program Advisor, Terrafina Microfinance says that efforts have been put in place to ensure that MFIs provide rural friendly financial products that will help farmers access credit."We have helped MFIs to bring out financial products that will meet the needs of most rural poor farmers and this has helped them (MFIs) to graduate,” he saidBirasa said that currently farmers are able to provide their harvest as collaterals and also guarantee each other in a group which has increased access to credit to rural folks.