Bangladesh
2 days ago

INTERVIEW

Modhumoti Bank to expand tech-driven services in remote areas

Says its Managing Director and Chief Executive Officer Md. Shafiul Azam in an exclusive interview with The Financial Express

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Modhumoti Bank PLC plans to expand its network further by providing technology-driven banking services largely for people living in the remote areas, said its Managing Director and Chief Executive Officer Md. Shafiul Azam.

In an exclusive interview with The Financial Express recently ahead of the 12 years of banking operations, he said the fourth-generation commercial lender aims to utilise agent banking to promote sustainable socioeconomic development by moving away from traditional and highly centralised banking approach.

The seasoned banker observed that everything in the country -- either banking or other services -- are mostly Dhaka- and Chattogram-centric, which is not a good sign as far as sustainable development goals (SDGs) are concerned. "We need to spread economic activities all around the country for a sustainable macroeconomic progress and we're working on it," said the top executive of the bank that began its operations on September 19 in 2013.

Outlining the bank's future plan, Mr. Azam, who brings more than 34 years of experience in the banking sector, said they have planned to increase the number of branches to 60 and agent banking outlets to 700 by the end of this year. Currently, the bank has a total of 52 branches and 635 agent banking points across the country.

He noted that they have been expanding the bank's loan portfolio very cautiously rather than aggressively since its inception to ensure proper use of the depositors' hard-earned money. As a result, the balance sheet of the bank is not very large, he said. "We have no interest in large corporate loans. Of course, we'll serve corporate clients -- but only to the extent that our balance sheet allows."

Instead of focusing on large-scale corporate financing, he said, they intend to provide small-sized loans through its agent banking network, with a particular emphasis on small and medium enterprises (SMEs). Currently, SMEs account for 21 per cent of the bank's loan portfolio and the management wants to raise the figure to 29 per cent in the coming days in line with the target set by the central bank, he said.

Regarding the question how the bank has maintained a comparatively low non-performing loan (NPL) ratio amid higher NPL environment, he said they have always been very selective and cautious in terms of selecting borrowers since the beginning of the banking operation.

Apart from borrower selection, he said, the bank management is always well aware about ensuring end-use of disbursed funds and simultaneously, they continue to monitor the borrowers regularly to facilitate timely loan recovery. "That's the reason behind controlling NPLs at 2.30 per cent until 2024," he said.

About maintaining low administrative cost, the CEO said the management maintains a strong focus on ensuring rational expenditure at any stage of the operations. They operate their outlets in compliance with relevant rules and regulations of the central bank. He said they rent only the spaces required to operate their branches or sub-branches and maintain all forms of costs very efficiently. As a result, the cost-to-income ratio stood at 35 per cent, which was the lowest in the industry to the best of his knowledge.

Responding to another query, Mr Azam said members of the board of directors keep focusing on policy issues but never interfere in the affairs of management authority. The result is obvious, he said, adding that the basic fundamentals of the bank have continued to improve and an external credit rating agency upgraded its rating by one notch based on the latest audited financials.

After the changeover in state power following last year's July-August uprising, he said majority of the banks, including Modhumoti, faced deposit withdrawal on a large scale.

And the bank paid back the money on demand without any delay. "And it helps regain the confidence of our depositors and as a result, the withdrawn deposits have started to return to the bank," he said.

The managing director further said that digital transformation is one of the bank's priority areas, as the number of a tech-savvy population continues to grow. Keeping the future banking demand from the Gen-Z population in mind, he said, the commercial lender intensifies its focus on adopting cutting-edge technology to provide banking services in a way the targeted clients love to have.

The experienced banker said the bank's lower cost of funds and administrative expenses helped them post a net profit of Tk 1.26 billion by the end of 2024.

jubairfe@gmail.com

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