Citizens Bank eyes CMSME growth, financial inclusion and digital transformation

Citizens Bank PLC, the country's newest private commercial bank (PCB), plans to offer a range of loan and deposit products aimed at bringing more unbanked people into the banking network while ensuring full compliance with regulatory requirements, said Chowdhury Mohammed Hanif Shoeb, Chairman of the bank, in an exclusive interview with The Financial Express (FE)'s Siddique Islam. He shared insights into the bank's current performance and future goals ahead of its third anniversary. The bank started its journey on July 03, 2022.

1. What are Citizens Bank's strategic priorities and business plans in the short, medium, and long term over the next five years?
2. In the short term, our focus is on building a strong foundation by ensuring full regulatory compliance and expanding our branch and alternative delivery channel (ADC) network across the country. We aim to diversify our product offerings in the retail and SME segments, including various deposit and loan products. We also plan to introduce Islamic banking windows or branches to serve the untapped religious customer segment. Upgrading our core banking system (CBS), enhancing digital infrastructure, and strengthening cyber-security will be top priorities.

In the medium term, we will focus on portfolio expansion, advanced technology integration, risk management systems, and targeted customer segmentation. In the long run, we aim to broaden our service umbrella to include rural banking, environment-friendly financing, and a range of corporate banking solutions.

1. Could you please elaborate on the bank's growth and expansion to date? Do you have any specific plans to further accelerate its growth in the coming years?
2. As of now, Citizens Bank operates 20 branches and 22 ATM booths throughout the country. Given our limited ADC footprint, we have made ATM transactions free of charge at any other bank's ATM nationwide to ensure greater accessibility for our customers. As of December 31, 2024, our total deposits stood at Tk 14.29 billion, while our loan portfolio reached Tk 8.27 billion. We are currently serving around 15,000 customers nationwide, and this number is steadily growing. To further expand our customer base, we are intensifying our marketing efforts-while maintaining strict compliance with regulatory standards.
3. Do you have any plans to enhance financing in the CMSME sector in the near future to help generate employment opportunities all over the country?
4. Yes, boosting financing in the CMSME (Cottage, Micro, Small, and Medium Enterprise) sector is one of our key strategic priorities-both to promote inclusive economic growth and to generate employment across Bangladesh. We have a comprehensive plan to scale up CMSME lending by expanding access to affordable credit for underserved micro and small enterprises. This initiative will also support entrepreneurship, rural development, and job creation nationwide, while contributing to portfolio diversification and the long-term sustainability of the bank. CMSME is a thrust sector of the Bangladesh economy, alleviating poverty by creating employment and serving as a driving force of industrialization.
5. Do you intend to strengthen your ongoing financial inclusion initiatives by bringing more unbanked individuals into the formal banking network?
6. Citizens Bank is committed to strengthening financial inclusion by bringing more unbanked individuals into the formal banking network. Our plans include expanding Agent Banking and Mobile Banking services, simplifying the account opening process, and promoting financial literacy to build trust among underserved communities. We also aim to offer tailored products for these segments, deliver government and private benefits through digital wallets or bank accounts, and incentivize beneficiaries to use their accounts for broader financial activities beyond just withdrawals.
7. Could you please share the current status and future plans of Citizens Bank regarding its digital banking initiatives?
8. Citizens Bank is laying the foundation for a robust digital transformation by modernising its core systems through LEADS/BankUltimus and enhancing its digital services. We have launched the "Citizens Fast" application, enabling customers to conveniently perform essential banking activities from home via a digital platform. While digital banking services in Bangladesh are currently at a basic level, we are clearly moving towards more advanced self-service features and increased mobile-based transactions.
9. Given the persistent rise in non-performing loans (NPLs) despite regulatory measures, what strategies would you suggest reducing stressed assets in the banking sector going forward?
10. Yes, the persistent rise in NPLs remains a critical challenge in the country's banking sector despite regulatory efforts. Reducing stressed assets requires a multi-pronged approach that combines regulatory, institutional, operational, and legal reforms. Key measures include strengthening credit risk assessment and underwriting standards, enforcing stricter due diligence and risk grading models, integrating a centralised credit information bureau with real-time data, and adopting AI tools to detect early warning signs of default.

We must also strengthen loan monitoring and early intervention through specialised units dedicated to loan monitoring and recovery, supported by effective Early Warning Systems (EWS) utilizing diverse data sources. Prevention measures lie in good borrower selection. Loan sanctioning and disbursement process, strict adherence to the norms of this process may reduce the inclination of NPL to some extent. Close monitoring of sector-specific risks, such as textiles and agriculture, is crucial. Modernising the legal and recovery framework should be a priority, as lengthy and ineffective judicial processes hinder recovery efforts. Reforming the "Artha Rin Act" to enable faster case resolution, promote out-of-court settlements, debt restructuring, and pre-insolvency frameworks is essential. Improving governance and accountability is equally important. Insider lending and poor board oversight are significant contributors to NPLs. Enforcing strict fit-and-proper criteria for bank directors, limiting political interference in lending decisions, and promoting performance-linked compensation for management can help mitigate these risks. Fortunately, Citizens Bank is currently free from NPL issues.

1. Do you anticipate any liquidity management challenges in the near future due to reduced cash flow, particularly as a result of slower recovery of NPLs?
2. Yes, liquidity management challenges are likely in the near future if the recovery of NPLs continues to lag. In Bangladesh and similar emerging economies with rising NPL ratios, slower recovery leads to cash flow constraints, reducing loan-able funds. High NPLs also undermine investor and depositor confidence, slowing deposit growth and causing premature withdrawals or deposit flight, especially in weaker banks. This puts pressure on Liquidity Coverage Ratios (LCR) and increases loan loss provisions. Additionally, it limits access to external credit lines, as foreign lenders and investors may tighten credit or demand higher spreads, restricting foreign currency liquidity vital for foreign trade.

siddique.islam@gmail.com