The country needs more banks since its active population and per capita income have doubled and many new industrial sectors emerged in the  past couple of years, a top banker has said. “If new banks concentrate on providing services in the rural areas, they will not only cover the country’s unbanked people, but also expand the areas of banking,” Md Ehsan Khasru, managing director (MD), Prime Bank Ltd, told The Independent, in an exclusive interview.

Bangladesh Bank (BB) has issued a directive to open new branches in both urban and rural areas on an equal ratio, he said adding, establishing new banks will help pull in scattered money of rural people by involving them into banking activities.Besides, he said, it would also improve rural economy as financial constraints faced by small and medium enterprises in rural areas could be removed by opening up new financing avenues for them.On Prime Bank initiatives for the unbanked, Khasru stated: “We are increasing the number of our rural branches, gradually.

”At present, 31 of the 119 branches of the Bank are rural, he noted.He added that during 2012 the Bank would open 12 new branches in both urban and rural areas, maintaining an equal ratio.Dwelling on better banking services, he said: “We should come out of the traditional banking mould.” He urged customers to go for new products and services availing themselves of the advantages of modern technology.

To this extent, Prime Bank is very much committed to offering its customers new products and services, Khasru said.“Ensuring the best use of modern technology, we have already introduced Internet banking, phone banking, bio-metric smart cards and SMS banking,” the Prime Bank boss said.Highlighting the importance of mobile banking (MB) and automated teller machines (ATMs), he said MB and ATM played a remarkable role in engaging ‘unbanked’ in banking without having a Bank branch.

In addition, people can withdraw their remittances very quickly through MB and ATM booths, he said, adding: “Prime Bank likes to go for financial inclusion through mobile banking.”“We would open more than 100 ATMs this year to cater to the needs of customers,” he said.Hailing the withdrawal of lending rate cap by the central bank last week, Khasru said the decision was very timely and it would give a boost to the banking sector.However, the Prime Bank MD expressed his grave concern over the possible rise in non-performing loans—now that the cap has gone—as some avaricious banks may aggressively turn profiteers.

“Some of the excessive profit-minded operators may disburse huge amounts at a higher interest rate to record enormous interest earnings,” he said, adding that it would increase non-performing loans, in the long run.“If any bank indulges in such activities, it will be a self-killing act,” he said.Suggesting that the banks raise interest rates by a maximum of two per cent, he said that commercial banks should charge at most 15-16 per cent interest on industrial loans.

“Prime Bank is very much aware of the pitfalls of aggressive lending and would not go for it,” he said, adding: “Our lending rate is always better than that of any other bank and we are very much competitive.”As there is a liquidity crisis in the banking sector now, for which industrial credit flow has been affected, he urged banks to cut bad loans and strongly monitor fresh loans to ensure that they are used for the purposes meant for.He suggested that banks should grant ‘any purpose loans’ with collateral to ensure their proper use.

Prime Bank’s bad loans stand at less than 1.5 per cent, he said.On the current vulnerable foreign currency reserves, Khasru said, “If we reduce about US $2-3 billion imports this year, forex reserves can be maintained at $10 billion.”In this case, he recommended that the government stop importing unnecessary and luxury goods.Citing achievements in the farm  sector, especially a good crop of rice, onion and garlic, Khasru claimed it had happened as the banking sector came forward to help supplement the government initiatives.

“As we are witnessing good achievements on the agriculture front, we can stop import of those agro-products that are produced in large quantities across the country,” he said.Prime Bank has already disbursed Tk. 50 crore  firm loans in the first half of the current fiscal year 2011-12, which is about 21.44 per cent of the target of Tk. 232 crore,  he said.On potential of the small and medium enterprise (SME) sector, he said now-a-days developed countries are putting more emphasis on the sector as new units were coming up here, which would help roll over capital.

In Bangladesh, the SME sector is also growing fast as the banking sector has come to its aid, he said, adding that the central bank is playing a remarkable role in boosting the SMEs.Private banks offer loans to SME entrepreneurs at low interest rates, he said.“We have 17 SME branches to meet SME entrepreneurs’ demands,” he pointed out.The 17 SME branches are offering different products, including Sahaj Rin, Sampad Rin, Chalti Rin, Moushami Rin, Digun Rin and Anchol (a loan scheme for women entrepreneurs).

Corporate social responsibilities (CSR) play a significant role in improving the socio-economic condition of people as the money directly goes to the grass-roots level, he said.Prime Bank sponsors different sporting activities, support educational, health and environment programmes, Khasru said.Prime Bank has established a separate organisation—Prime Bank Foundation Ltd (PBFL) – for its CSR activities, he said. Four per cent of the bank’s profit is set aside for PBFL, he said.As part of CSR activities, Prime Campus, an English-medium school in Uttara, was founded by PBF in 2008, which is an alternative to expensive English primary schools.Besides, he said, an eye hospital would be inaugurated on January 21, at Sat Mosjid Road, Dhanmondi in Dhaka, for poor blind people.

“We also have a plan to establish a nursing academy to turn out skilled nurses who would be good for jobs at home and could even go abroad for employment, thus earning precious foreign exchange for the country,” he said.The success of a bank depends on its progressive board of directors and strong managerial personnel, he pointed out adding: “We have both and our board encourages freedom of thinking,” he said.

A second generation bank, Prime Bank secured the number one position in 2011, in terms of balance sheet, growth, profitability and external ratings.Besides, the Bank bagged various prestigious awards in 2010, including that for best bank awarded by Institute of Chartered Accountants of Bangladesh, on the basis of evaluation of best published accounts and reports. It was also awarded South Asian Federation of Accountants Best Bank 2011, on the basis of the evaluation of annual reports.

The Daily Independent/Bangladesh/ 15th Jan 2012