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Banks are capable of facing coronavirus challenges

Says SBAC Bank CEO Tariqul Islam Chowdhury in exclusive interview with Bangladesh Post


Published : 08 Sep 2020 08:38 PM | Updated : 04 Jun 2021 01:49 AM

The banking sector of Bangladesh is capable of facing the challenges posed by the novel coronavirus, which has put the world economy in a dire strait, said Tariqul Islam Chowdhury, CEO and Managing Director of South Bangla Agriculture Bank.

In an exclusive interview with Bangladesh Post, he said banking sector is playing a vital role in the industrial development of the country as most of the loans from are disbursed to the industrial sector.

He said the banks are making significant contributions to the creation of new entrepreneurs, expansion of import and export business, development of SME sector and agriculture sectors, women entrepreneurial credit and foreign trade. 

Replying a query, he further said that despite many wounds on all sectors of economy due to the coronavirus pandemic, Bangladesh has an ample opportunity to turn around laying emphasis on doing well in trade and commerce to minimise the impact of COVID-19. 

Tariqul Islam Chowdhurty replied to a set of queries from Bangladesh Post covering almost all the aspects in the banking industry, including economic growth, challenges of commercial banking and their remedial measures in the long interview. 

The excerpts of his interview are produced here:  

Bangladesh Post: Would you please describe the challenges that the overall banking sector may face as part of the long term impact of Covid-19 situation?

Tariqul Islam Chowdhury: In the context of Covid-19, the whole world system is in turmoil. We are struggling to cope with such a big crisis. For three or four months the movement of people was very limited. 

As a result, there is a kind of stagnation in trade and commerce around the world. After the coronavirus was detected in Bangladesh, a lockdown was imposed between the end of March and May 2020. 

Every index of the economy is negatively affected. Imports, exports as well as remittances are alarmed. Although a large part of the expatriates has moved to the country, a record amount of remittances has come temporarily. However, experts are of the opinion that it will be reduced to a large extent. 

Private investment also records the lowest growth rate in the last decade and a half. As the country's domestic investment is bank-dependent, the Covid-19 situation is most worrying to the banking sector. However, the government has announced several stimulus packages to overcome the situation, which are being implemented through banks. Gradually the situation in the world is becoming normal. It is hoped that the banks will be able to meet the challenges.

Bangladesh Post: As an expert with long time experience in commercial banking, would you please tell us what strategies the banks may adopt to mitigate the harms caused by the Covid-19.

Tariqul Islam Chowdhury: See, the epidemic coronavirus is a new experience for the world. There have been many plagues on this earth before, and we have also seen many wars. But Covid-19 is the common enemy of us all. So all the countries are trying to deal with the adverse situation. This coronavirus has hit at the time when Bangladesh is on the way to a middle income country. This time of transformation is important for us.

 At such a time such a big crisis has really made us think. However, for a country like Bangladesh, there is an opportunity to do well in trade and commerce. We have to give priority to agriculture and CMSME sectorsfor investment. Besides, if we can focus on the production of medical equipment and Covid-19-based products, it will also have a positive impact on the export trade. Since we have excellent business relations with the United States, Europe, China and India, it will not take us long to overcome the situation.

Bangladesh Post: What role the SBAC is playing in terms of financial inclusion which has been one of the prime focuses of the central bank in the recent years? 

Tariqul Islam Chowdhury: One of the purposes of all our economic activities is financial inclusion. Bangladesh Bank has been conducting various activities to bring people under banking services. In this context, South Bangla Agriculture and Commerce Bank started its journey in 2013 with the great confidence of bringing banking services to the doorsteps of the people. 

Half of our branches are located in rural areas. Through these business centers, we are delivering banking services to remote areas. South Bangla Bank is successfully operating school banking, farmers' bank accounts, bank accounts of ten, fifty and one hundred Taka etc. Besides, we are providing banking service through mobile wallet service 'BanglaPay'. We have also strengthened financial inclusion activities through credit-debit cards and branches. We are also trying to give services through agent banking.

Bangladesh Post: We know that the banking sector is bearing a huge burden of Non-Performing Loan (NPL) which is being heavier day by day; would you mention the possible solution to get rid of this vice? Please mention the NPL situation in your bank.

Tariqul Islam Chowdhury: Defaulted loans are a curse for the banking industry. We see two types of defaulting customers. A group of businessmen has gone bankrupt due to various adversities and disasters. Another group willful defaulted. I want them to be convicted. To reduce non-performing loan, the government and the central bank have taken various initiatives from time to time. 

We are already noticing some positive results. The government has taken initiatives to form an independent body called `Asset Management Corporation’ to collect defaulted loans. I think, a combined initiative is needed to reduce defaulted debt. Our bank is very careful in investing from the beginning. 

Credit risk is well analyzed and our defaulted debt is much less than the entire banking sector. Hopefully, it will be possible to maintain this positive continuity in the future as well.Overall, we have to be cautious before sanctioning loan and loan monitoringis also very important.  

Bangladesh Post: How the SBAC distinguishes itself from other similar type of banking practices? What are the unique traits of your bank?

Tariqul Islam Chowdhury: Bangladesh is a country of immense potentials. The banking sector is playing an important role in the industrial development of Bangladesh. Most of the total loans in the banking sector are disbursed to the industrial sector. 

Banks are making significant contributions to the creation of new entrepreneurs, expansion of import-export business, development of SME sector, development of agriculture sector, women entrepreneurial credit and foreign trade etc. 

South Bangla Bank has been cooperating in the development of agriculture and small and medium enterprises. We are also doing well in foreign trade. We are disbursing loans to our banks in the areas of industrial loans, SME loans, agricultural loans, women entrepreneurs’ loans, etc. 

In addition to savings accounts, current accounts, SND accounts, various fixed deposit accounts, various monthly savings schemes, we are constantly launching new deposit products. As we have recently introduced the `SurokkhaSanchayHisab and Surokkha Millionaire Scheme’,where customers will get insurance coverage, the premium of which is paid by the bank.`BanglaPay’ is a unique wallet which is very comfortable for the customers.

Bangladesh Post: How would you assess the role of agent banking in wider expansion of the banking services?

Tariqul Islam Chowdhury: Providing banking services through third parties is called Agent Banking Services. Through agent banking, we have changed our thinking of old days. It is becoming possible to extend the services of the bank even to remote areas. The management cost for this is also getting much less. 

In the way of agent banking, many unbanked people are getting access to the mainstream of the economy, which is also seen as a milestone in the growth of bank deposits. In addition to agent banking, Financial Inclusion (FI) booths mean Sub-Branches are also playing a vital role in financial inclusion.

Bangladesh Post: Now please tell us about the asset base, capital base, deposit and liabilities of your bank.

Tariqul Islam Chowdhury: SBAC Bank is a fourth generation bank. Recently, the financial statements of our bank for 2019 have been audited. According to the statements at the end of 2019, SBAC Bank's deposits stood at Tk 7,154 crore; which was Tk 5,930 crore at the end of the previous year. 

And the amount of advances stands at Tk 5,600 crore; which was Tk 5,025 crore at the end of 2018. At the end of 2019, the total assets of the bank stood at Tk 8,456 crore. However, the Covid-19 situation has made a negative impact on the bank's deposits and profits.Our capital base is very strong. Our CRAR is 14.73 percent.

Bangladesh Post: As a career banker, coming at the position of a Managing Director, do you think that you are a successful banker? In this connection please tell us how a banker can achieve the desired success in his career? 

Tariqul Islam Chowdhury: You see, in the last decade, there has been a lot of turmoil in the banking sector. Banking sector has been weakened by big financial scandals. However, the people of this country keep their earned money in the bank at the end of the day. 

Sometimes, we have not been able to play a proper role in protecting deposits. Everyone in the banking sector must take responsibility for this failure. And personally my banking career started through state-owned Sonali Bank. I have served as DMD in that bank. Now I am working in a fourth generation private bank. 

Whether I am a case of success or failure is a relative term. What are the criteria to call someone a case of success or failure? I leave the matter to the customers. 

And for those who want to build a banking career, I would say, those who are related to the financial sector must be honest. No one can stop your success if you work with honesty, skill and dedication.