Md. Arfan Ali

Ahammad Parvej Khan
Commercial banks have now been involved in many development projects of the government, especially infrastructure development projects. This has helped the banks a lot in achieving higher business growth. Some banks are now going for long-term financing and contractor financing.
There are a good number of power sector projects which require long-term financing. In many cases, private commercial banks are playing leading role in financing the development projects. It is good that the banks are allowed to get involved with government’s development programmes.
Financial inclusion is very much vital for fastening the overall socio-economic development. Bank Asia has been contributing a lot to promoting financial inclusion. The bank’s first financial inclusion programme was getting engaged with the government’s ‘Ekti Bari Ekti Khamar’ project. It was a very good development model.
Still almost 50 percent of our adult population has remained out of banking services and they do not have bank accounts. If we want to transfer the benefit of economic development then it is very much urgent to bring them under banking coverage. For this they need to have bank accounts.
Bank Asia has also pioneered in agent banking which has been a big deal for the bank and the country as a whole. We believe that reaching banking services to the grassroots level has become very easy for us through agent banking.
Md. Arfan Ali, Managing Director and CEO of Bank Asia Ltd said this in an exclusive interview with the Bangladesh Post.
Following is the excerpts of the interview.
Bangladesh Post: First of all please tell us how can the recent government to reduce CRR in banks and raising share of deposit of SOEs to private banks impact credit growth.
Md. Arfan Ali: Although there is criticism that CRR has been reduced and deposit ratio of SoEs has been raised to benefit private bank owners, it needs to assess the objectives of the decision. Reduction of CRR will give more liquidity support to banks. The customers will be benefited for this. The role of the banks and other FIs in economic development will be further strengthened. From that point of view this will certainly put some positive impact on the economy. The way investment and employment in the country is increasing, there should have a continued and smooth credit flow. The decision was taken to ensure that. CRR is basically a part of credit control mechanism. It is usually a tool of the central bank to enforce its monetary policy.
Similarly the decision of sharing deposit of SoEs equally among the public and private banks also has a positive side. Private or public – all banks are engaged in similar type of banking activities. All are contributing to development of the economy. Previous 75:25 ratio was rational at the time, as because private banks could not gain resilience or gain trust by then. But now the private banks are playing most significant role in economic development. Since the private banks are playing extended role in economic development, they should enjoy the similar facilities.
Although some quarters raise questions on capacity of some private banks, it absolutely depends on an organisation to choose the bank where they will keep their deposits. Trust worthiness matters here. It is not order for them to keep deposits with any particular bank. This is the high time for a depositor to choose the bank as most of the private banks are now doing well. In comparison to other developed economy, the ratio of our GDP to banking is not that high.
Bangladesh Post: How do you evaluate the country’s credit growth in the recent years?
Md. Arfan Ali: I must say the credit growth ratio is comfortable. There is a relation between credit and GDP growth. The country at present maintains over 7 percent GDP growth. This is very much encouraging and it was possible due to significant credit growth. Since country’s GDP is growing, there should have a good demand for credit.
Bangladesh Post: The national budget for FY 2018-19 has recently been finalised. What incentives did the banking sector achieved?
Md. Arfan Ali: The corporate tax has been reduced in the budget. This is an incentive for the private sector or corporate bodies. Now what will happen, this money will be re-invested and ultimately the investment flow will be expedited. Government has a target of borrowing from banks for deficit financing. But if the government makes extensive borrowing from banks, then it will be a problem. Moderate level of borrowing is acceptable. In the recent years, the government did not need to go for huge bank borrowing because of high sale of savings bonds.
Bangladesh Post: Now please tell us about the recent trend of commercial banking.
Md. Arfan Ali: Commercial banks have now been involved in many development projects, especially infrastructure development projects. Some are going for long-term financing, contractor financing etc. Power sector requires long-term financing and for contractor financing it is short-term lending. In many cases, private commercial banks are playing leading role in development activities. It is good that the banks are allowed to get involved with government’s development programmes.
Bangladesh Post: Would you please let us know about recent performance of Bank Asia, its profit, asset and liability etc.
Md. Arfan Ali: In 2017, Bank Asia maintained much consolidated position comparing to previous years. Our rating is now better and we are doing better risk management. In classification, our ratio is now over and around 4. We have built a huge reserve and so it is a comfortable zone for us and classification cannot embarrass us. If we can realize classified fund, the balance sheet will not be affected because there is sufficient reserve to support it. Now we have a total of 125 branches, maintaining 1: 1 ratio in rural and urban areas. In fact the number of rural branches is higher. Some 4 to 5 are loss making branches, but not in true sense. We started those branches and usually it takes more time to turn branches profitable in some areas.
Bangladesh Post: Please tell what role Bank Asia is playing in financial inclusion?
Md. Arfan Ali: We have been working a lot for promoting financial inclusion. Still almost 50 percent of our adult population has no bank accounts. If we want to transfer the benefit of economic development then it is much urgent to bring them under banking coverage. For this they need to have bank accounts. Our first financial inclusion programme started with government’s ‘Ekti Bari Ekti Khamar’ project. It was a very good development model. We have also pioneered in agent banking. Agent banking has been a big deal for us and for the country as a whole. Now we believe that reaching the banking services to the grassroots level has been very easy for us through agent banking model.
Some third parties have been engaged to reach the banking service to some places on our behalf. I believe this partnership will be further strengthened day by day. We have signed contacts with A2I project of the Prime Minister’s Office to open union digital centers. We are also working in different districts to make monthly payment of the beneficiaries of the social safety net programme of the government, especially in Kishoreganj, Chapainawabganj districts. Earlier the public banks used to do this but there was no bank account of the beneficiaries but now every beneficiary has got a bank account. This is huge task in financial inclusion. Corruption in disbursing fund will also lessen significantly because of digital transaction.
Financial inclusion is major task for us if we want to graduate to middle income nation. We believe that the union digital centres will turn into growth points in the future. The government is also working relentlessly in this regard.