Public sector banks continue to contribute to the growth of Bangladesh economy in diverse ways, said Dr Zaid Bakht, an eminent economist as well as the Chairman of Agrani Bank Limited, in an exclusive interview with Bangladesh Post.
He said the contributions include financing various development programmes of the government specially in the field of infrastructure development, and power and energy sector, also providing funds for Mayor Hanif flyover, foreign exchange needs of Padma bridge and a large number of power plants.
Bakht replied to a set of queries made by Bangladesh Post. The excerpts of his detailed interview is produced here in the social supplement of Bangladesh Post on the continued contribution of the leading public sector bank, Agrani Bank to the country's economy and industrial growth.
Bangladesh Post: Would you please brief us how the public sector banks are playing its part in the way of industrialization and in reaching upto the today's level economic development of Bangladesh?
Dr Zaid Bakht: Public sector banks continue to contribute to the growth of Bangladesh economy in diverse ways. This includes financing various development programs of the government specially in the field of infrastructure development, and power and energy sector. Providing funds for Mayor Hanif flyover, foreign exchange needs of Padma bridge and a large number of power plants in both public and private sector are examples of such support provided by public sector banks in the development process of Bangladesh.
Bangladesh Post: In this regard you please mention the participation of your bank, Agrani Bank, as one of the top ranking state run financial institute?
Dr Zaid Bakht: Agrani Bank provided equity financing in the Mayor Hanif Flyover project along with other leading public sector banks. Agrani Bank is the sole supplier of foreign exchange for the construction of the Padma bridge and has so far contributed nearly $1 billion for this purpose. Agrani bank is also involved in financing some of the major private and public undertakings in power generation.
Bangladesh Post: Now, please tell us about the challenges, the commercial banks are facing in the recent years, specially mentioning the position of the public sector banks?
Dr Zaid Bakht: The main problem facing the banking sector in Bangladesh is the huge size of non-performing loans. Poor lending practices coupled with collusion with borrowers and pressure exerted by influential borrowers are the main reasons behind the large volume of NPL. The incidence of NPL is much higher in the case of public sector banks as they are more susceptible to factors contributing to generation of NPL. Recovery from NPL has been poor as the legal process is too weak and lengthy for effective loan recovery initiatives.
Bangladesh Post: Despite presence of a huge number of banks in the country, still more than 60 percent of people are out of the banking network, as an economic analyst what would be your suggestions to bring the unbanked people under banking network?
Dr Zaid Bakht: Use of agent banking has proven to be cost effective way of reaching unbanked people in the country and should be pursued further. Agrani bank is the only public sector bank practicing agent banking.
Bangladesh Post: Public sector banks, as we know, are not only considered as a financial institute, but they are also known as social organisations, so how would you adjudge the success of Agrani Bank from that point of view?
Dr Zaid Bakht: Agrani bank performs its social role in several ways. Like all public sector banks, it administers fund distribution for various safety net programs of the government free of cost. Under its CSR arrangement, Agrani provides financial support to educational institutions, sports related initiatives specially in the areas of non-traditional sports, and distribution of warm clothes to distressed people during winter.
Bangladesh Post: Would you please tell us how the Agrani Bank is making difference with others in terms of banking practices, services, products and governance?
Dr Zaid Bakht: Agrani bank has focused on using improved technology for better lending practices. It was the first public sector bank to provide real time on line banking services through all its 900 plus branches. It is also the only public sector bank involved in agent banking practices. Because of these initiatives, Agrani has been the highest remittance earner amongst all public sector banks. It also has the lowest NPL rate amongst the public banks. Of the new loan approved and disbursed since 2015 by Agrani bank, the NPL rate is only 2.92%. To spur growth in various agricultural activities, Agrani provides loan at the lowest rate of interest particularly in spice and milk production and other such potential agricultural activities.