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The Financial Express

'Dhaka Bank to change the age-old banking structure'

Its MD tells FE


| Updated: July 22, 2020 18:03:58


Emranul Huq Emranul Huq

Dhaka Bank Limited (DBL) has planned to introduce diversified financial technology (FinTech) based-services to ensure uninterrupted banking services for their customers, the bank's top executive has said.

"We're committed and focused on making our bases stronger in order to stave-off any crisis as well as to ensure uninterrupted banking services through introducing diversified FinTech- based services for our valued customers," Emranul Huq, managing director (MD) and chief executive officer (CEO) of DBL disclosed while sharing his future business strategies in an exclusive interview with the Financial Express (FE) recently.

As part of the strategies, the leading private commercial bank (PCB) will rearrange and redesign its business portfolio to ensure sustainable growth in the coming years, according to the top executive.

"And finally, with the ever-changing banking environment in line with the international banking industries, I believe Dhaka Bank will be one of the leading banks to change the traditional banking structure and introduce banking for future," Mr. Huq explained.

He also said FinTech can be the most useful weapon to expedite the ongoing financial inclusion programmes across the country aiming to bring more un-banked people into the banking network.

FinTech is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services using smart phones or internet.

He also said DBL is the first bank in the industry to complete integration with bKash for transferring money from bank to bKash.

"We've introduced one of the most vibrant and user-friendly mobile apps DBL GO, through which our customers can conduct their banking transactions from wherever they are," the CEO noted.

The senior banker also spoke on different issues including execution of the government announced financial stimulus packages, impact of single-digit interest rate, non-performing loans (NPLs) of the banking sector and managing liquidity in the near future amid the Covid-19 pandemic.

About implementation of the stimulus packages, Mr. Huq said the government has committed to refinance partial amount disbursed under these packages, considering the present condition of liquidity, whether all the banks are in good shape to execute the packages at the first place is the major question.

"Cash withdrawal tendency has created an immense pressure on the overall liquidity condition of the banks mainly due to the slowdown in the recovery along with lower deposit growth. If this situation is covered accordingly, our banking sector will be able to handle the situation," the CEO said while replying to a query

Prime Minister Sheikh Hasina has so far announced a total of 19 stimulus packages worth Tk 1.03 trillion to offset the shock of novel coronavirus (COVID-19) pandemic on various sectors of the country.

The packages, which are 3.7 per cent of the country's gross domestic product (GDP), will be implemented under the supervision of the central bank and the ministry of finance.

Most of the banks are now facing difficulties to collect fresh deposit with offering 6.0 per cent interest rate because of various issues including higher yield on the government savings instruments, according to the CEO.

In order to reduce the cost of deposit, the only feasible way is to revise the deposit mix by swapping high cost deposits with low cost current account and savings account (CASA) deposits, he added.

"But building a sustainable base of CASA deposits isn't an overnight task, it generally takes time. For this reason, overall cost of deposit of any bank can't be expected to come down sharply," Mr. Huq, a 34-year experienced commercial banker, said while replying to another query.

The board of directors of DBL promoted Mr. Huq as the MD & CEO with effect from February 22, 2020. Prior to this role, he was serving the second generation PCB as the Additional Managing Director & Chief Business Officer.

Mr. Huq started his career with Bank of Credit & Commerce International (BCCI) in Dhaka as Management Trainee in 1986.

Before joining DBL in 1998, he also worked at Eastern Bank Limited and Credit Africa Bank Limited in Zambia in various capacities.

The CEO also said DBL is now focusing more on non-funded business in order to supplement the shortfall in the interest income following implementation of single-digit interest rate from April 01.

"Reducing deposit costs by improving the overall deposit mix is one of the top priorities at the moment," he said while explaining the latest overall interest rate situation of the banking system.

He also said that DBL is now offering various products and services targeting the depositors' timely needs and requirements amid the coronavirus pandemic.

"Due to the prevailing pandemic, overall credit growth across the industries has definitely slowed down. But with the gradual development of the situation and having the economic activities coming to its regular course, we are also supporting our customers by ensuring uninterrupted financing activities," the CEO added.

The senior banker predicted that the banks and other financial institutions might face liquidity pressure in the near future mainly due to lower cash flow in the recent months.

The Bangladesh Bank (BB) had already relaxed its policy asking the banks to suspend adverse classification of any loans till September 30 from the status of January 01, 2020 to facilitate business activities that have been adversely affected by coronavirus outbreak.

Mr. Huq expressed his gratitude to the central bank of Bangladesh as it had taken lots of measures to facilitate all the scheduled banks and borrowers.

"In this situation all the banks must monitor the recovery of the loans and advances more closely," Mr. Huq recommended.

He also said the NPLs are considered as the main problem of the country's banking industry.

The NPLs have negative impact both on profitability and the liquidity of the banking system. Stakeholders' interest comes under threat with the rise of classified loans," the CEO explained.

He also suggested forming an independent entity to assess the credit history of the customers, just like the Credit Rating Agencies in Bangladesh to bring down the volume of NPLs.

The CEO also feared that most of the PCBs might face lower profitability by the end of this calendar year following implementation of 9.0 per cent interest rate on all loans except credit cards.

Earlier on February 24, the central bank instructed banks to fix a maximum 9.0 per cent interest rate on all loans except credit cards as part of the government initiative of bringing down the rate to single digit from April 01.

The senior banker emphasised on establishing a vibrant bond market with improving the investors' literacy regarding the trading process of the securities.

"Policy level development is required from the regulators in order to stimulate the corporate entities to participate in the bond market rather than going to commercial banks for long term debt financing," Mr. Huq noted.

DBL observed its 25th anniversary in a modest manner considering the current ongoing pandemic situation in Bangladesh on July 05.

Quality human asset, technology-based advancement and good corporate governance have been DBL's cornerstones since its inception.

The principles have already given several recognition and awards.

The Dhaka Bank received 9th IFC Trade Award 2019 as a Best Issuing Bank in South Asia for best utilisation and performance of the Global Trade Finance Programme limit maintained with IFC (International Finance Corporation), a member of the World Bank Group.

Besides, DBL has been awarded 'Bank of the Year-2018 in Bangladesh' as the industry standard for banking excellence from The Banker (UK) for its strong management, sound business model, banking innovations and prudent risk approach.

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