Md. ShafiulAzam

The Bangladesh economy is now very vibrant and is showing upward trend in all indexes. We are now competing globally. The country is not only exporting RMG products. Lots of other products and commodities have already added to the country’s export basket.
Country’s leading energy sector company Energypac is exporting transformers to India, Hatil, a furniture giant, has a good number of outlets in different states in India including Siliguri, Bihar, Kolkata. They are performing and competing globally.
If the bank rate here differs with the rates in the neighboring countries, then it will be very difficult for them to survive.
In order to boost trade, both domestic and export, it is imperative to ensure lending at single digit interest rate.
Md. ShafiulAzam, Managing Director and CEO of Madhumati Bank Ltd said this in an interview with the Bangladesh Post.
The following is the excerpts of the interview.
Bangladesh Post: The bank owners have recently taken a move to bring down the bank interest rate to single digit. Would you please share your observation over the issue?
Shafiul Azam: As a professional banker, first of all, I wholeheartedly support the initiative because I firmly believe that such a high rate of interest doesn’t exist anywhere in the world. The Bangladesh economy is now very vibrant and is showing upward trend in all indexes. We are now competing globally. The country is not only exporting RMG products. Lots of other products and commodities have already added to the country’s export basket.
Country’s leading energy sector company Energypac is exporting transformers to India, Hatil, a furniture giant, has a good number of outlets in different states in India including Siliguri, Bihar, Kolkata. They are performing and competing globally.
If the bank rate here differs with the rates in the neighboring countries, then it will be very difficult for them to survive.
We are also discussing the issue with the Bangladesh Bank, Ministry of Finance and also in different forums like ABB, BAB. In the era of free market economy, Bangladesh Bank, as a regulatory body, cannot force banks to follow any certain rate of interest. Bangladesh Bank advised us to take steps as per the decision of BAB and ABB — the organizations of bank owners and MDs. We also had shown our positive attitude in this regard but we requested to bring down the deposit rate as well.
What I think the single digit rate is not a thing to be implemented instantly. It will be done gradually and from last Monday we have instructed all concerned to implement the single digit rate in some particular cases.
I believe it will be difficult for the old banks to execute single digit because they have huge non-performing loans. Comparatively, NPL is much less in new generation private banks. We prefer low cost deposits. We have already signed deal with government agencies like BPDB, REB, DESA, WASA to collect utility bills, collecting account of cash management and trying how to reduce cost of fund and establish the single digit rate of interest.
Bangladesh Post: What challenges do you think might create obstacles in the way of implementing single digit interest rate?
Shafiul Azam: I think there are challenges. The rate of interest depends on market situation — demand and supply. For the last 2 years, the credit growth is much higher in the market than that of credit growth. Secondly, only because of one bank, most of the deposits in market moved to public banks during last one year, though the government has recently given a decision to share the deposits of state-owned enterprises (SOEs) by 50:50 ratio. I think this should be made mandatory.
Bangladesh Post: Would you tell us something about the ongoing process of recovering the stolen money of Bangladesh Bank from the Federal Reserve Bank of USA?
Shafiul Azam: The manager of Rizal Bank of Philippines was directly involved with the process of reserve heist of Bangladesh Bank. Now the recovery of the stolen amount can be made through the legal process. But the government of Philippine is not playing its due role in this regard. The difficulties there are almost similar to that of Bangladesh, as loan defaulters or criminals here take the advantage of loopholes of law to escape.
Among the loan defaulters in our country you will find most are willful defaulters, while some victim of situation. In case of victims of the circumstances, the banks take the thing sympathetically. Our bank is a small one. Still in some cases of default loans, we consider exemption of interest for some sick parties for those who have some real reasons behind loss in business. But stringent measures should be taken against the willful defaulters for the interest of the economy.
Bangladesh Post: Now please tell us about how far this decision is followed by the SoEs?
Shafiul Azam: The depositors have got their own choice or options and they want security for the deposits.
Banks are also accountable to the government for maintaining the deposited funds. Now, the question lies on capacity of maintenance of deposits. I must claim the private sector banks are more capable than the public ones in this connection and it is proven by the data or facts and figures preserved with the central bank.
Bangladesh Post: Already an unhealthy competition is going on in the market in terms of hunting deposits. So now if the deposit rate goes further down, then how banks can coup up with this situation?
Shafiul Azam: I must say the banks those are able to ensure security will be able to ensure sustainability in banking business. Still there is a huge number of unbanked people in the country. We are working relentless to bring them under banking coverage. Our target of becoming a developed country will be possible only when all citizens will come under the coverage of banking services.
We have a pilot project which is going to be launched by Prime Minister Sheikh Hasina today (July 17, 2018). We are working how to disburse the government allowance for the widows, elderly people, freedom fighters etc.
We have products for elderly people, women and students. We are diversifying services for covering wider range of people from different strata of the society.

Ahammad Parvej Khan