Efficient human resources and risk managers could make financial institutions (FIs) sustainable through minimising possible risks in various forms, Managing Director and CEO (Chief Executive Officer) of Islamic Finance and Investment Limited (IFIL), AKM Shahidul Haque said.
Mr. Haque, who started his four decade-long banking career in 1977, said the industry scenario is changing very fast in the global context. Before the professionals get outdated they must take initiatives to develop the industry in accordance with the global best practices in relation to the market, risk management and compliance.
About various initiatives to restructuring and rebranding the country's first Islamic Shariah-based Financial Institution (FI), he said when he took the charge of IFIL, the process of conducting business, departmental functions, operational procedures and services were not up to the mark.
"So I felt the necessity for restructuring the FI to make the service prompt and complied in accordance with the Bangladesh Bank guidelines," the banking expert said.
As part of re-shaping the plan, he introduced some new departments and divisions in line with the best practices, like Asset-Liability Management, Logistic Support, IT-based MIS, Marketing and Public Relations, Credit Risk Management and Recovery-Monitoring.
About output of such restructuring activities, Mr. Haque, who served various commercial banks like Midland Bank Limited, Mercantile Bank Ltd, National Bank Ltd and Prime Bank Ltd in different important capacities, said the IFIL is now one of the strongest NBFIs in the country considering management of credit risk, liquidity risk and other operational risks.
"The coming years will see the real exposure with a sustainable growth in the businesses of the company," he asserted.
"We registered 27 per cent investment growth in 2017. The volume of NPL volume came down to 4.49 per cent in 2017 from 8.0 per cent recorded two years back. It is projected that the NPL rate will decrease further in this year. Not only that, profitability of IFIL have gone up and its stakeholders are receiving good amount of dividend," he said.
Replying to a query of the company's plan in the new year, he said the management has overhauled the inside process and systems in such a way that the firm can now rely on its own capacity. The risk management process can now handle a larger scale of business and can ensure better quality of investments.
As part of its market expansion move, the company planned to introduce more diversified and unique products like technology-based Nano-financing. At the same time, the company plans to increase its network by opening two more branches in this year.
"We've also decided to open a brokerage house within this year. At the same time, the company wants to be more focused on SME (small and medium enterprises) finance," Mr. Haque, who is also Founding Managing Director of Midland Bank Limited. He was appointed as Managing Director and Chief Executive Officer (CEO) of Mercantile Bank Limited in 2009.
Asked about problems faced by the NBFIs, he said banks and NBFIs are now playing in the same market. In this common market, banks are providing lease finances which were the major investment product for the NBFIs and NBFIs are collecting deposits from the clients, a product for the banks.
So, the cost of fund is usually higher than the banks and that affects the investment of the NBFIs. However, IFIL is managing liquidity and spread in a very efficient and professional way to overcome this crucial problem and are offering very competitive rates for both the deposits and investments, he said.
About recent scams of banking sector, he said there is a misconception that the directors are the owners of the banks. Sometimes directors also claim the ownership.
Dispelling this misconception, he said sponsors or directors are contributing only 15-20 per cent of the total capital and the rest comes from the general shareholders. So, general shareholders and the depositors should be called the real owners of banks and FIs.
He said an acute dearth of skilled manpower is hitting the sector hard. If an employee is not properly skilled, he/she actually damages an entity. One mistake can expose the bank to high financial risk. This particular risk should be addressed properly with the other identified core risks.
"I think financial inclusions can be done through increasing number of branches of the existing resilient banks, introducing agent and mobile banking wings to cover unbanked people instead of raising number of banks," he replied to a question of necessity of more banks.