Mobile banking is a far-reaching vision that promises to improve financial inclusion of huge unbanked population who still remains outside the bank’s ambit, said Md. Mehmood Husain, Managing Director of Bank Asia. About 80 per cent of the country’s population still lives in rural areas and most of them do not have access to Bank accounts.

Those who have relative abroad, face a lot of problems in receiving remittances. “Express Cash -- a mobile banking service – of our Bank will address this disadvantages,” said the managing director,” adding that it is easier and faster domestic remittance service. This is fully web-based, secured and quick to deliver.

It enables remitter faster and more efficient financial transfers, increasing the volume of trade and subsequent payments to workers and their families, said Mehbood, also the president of the Bank , while talking to the Independent recently at his office. He dwelt on various issues centering the country’s banking sector, its problem and prospects, human resource developments and performance of his Bank , its services and visions.

Bank Asia always maintains its endeavour for IT based product innovation. Not only the Express Cash, it also introduced an Online Payment Gateway Service Provider (OPGSP) – AlertPay -- in Bangladesh for freelancers and IT experts to get money smoothly from abroad against export of their services.

Mehmood said a huge number of youth, even outside the capital, are now earning foreign currencies through outsourcing as freelancers. “We are trying to collect their data and contact them to help them receive money from abroad,” added he.

In the recent past, the Bank also launched a good number of products to meet customers’ growing demand. Some of the products included LankaBangla Card Cheque to meet the cheque service of NBFI’s credit card customers, Smart Junior Saver Account -- an Islamic banking product -- to bring the children-students of tender age under the umbrella of banking services.

Dwelling on the overall health of the country’s banking sector, he pointed out that the tight liquidity situation that persisted even few month ago has eased up to a large extent. He, however, said that the money market is still relatively tight and attributed the reason mainly to the contractionary Monetary Policy.

“The present liquidity situation is not a crisis. It is not an obstacle, rather it is an outcome of the central bank’s policy impact,” he said stressing the need for aligning banks strategies with Bangladesh Bank’s monetary policy stance. “We should not entertain unproductive sector.”

Bangladesh’s economy, he said, is gradually turning over from the impact of capital market volatility and tight money market situation. However, soaring inflationary situation and growing political unrest are still looming large. At this point, there is an acute need for right coordination between monetary policy and fiscal policy to ensure sustainable growth of the banking sector. Moreover, stable inflationary situation is also a key driving factor for banking business.

Despite the tight financial situation, the Bank was quite upbeat to close the year 2011 with adequate capital. During the year total eligible capital fund was enhanced by Tk. 4,290 million and the total fund stood at Tk. 12,447 million. The capital adequacy ratio stood at 14.88 per cent against minimum requirement of 10 per cent .Total operating profit (consolidated) was Tk. 4,224 million.

The Bank has proposed 20 per cent stock dividend of Tk. 1,051 million for 2011. During the year the deposit was increased by 10.15 per cent and loans and advances by 4.17 per cent. The import business of the Bank was, however, declined by 9.9 per cent to Tk. 99,414 million over last year. But the export was Tk. 74,795 million which registered an impressive growth of 30.57 per cent.

In financial sector, role of human resource development plays a more critical role than any other institutions. The country has huge population but the industry hardly gets skilled, smart and knowledgeable manpower. The industry is growing fast. Every year, most of the banks are extending their branches which require huge number of skilled manpower.

Most of the young graduates entering the profession are not staying longer in a single Bank. Many of them are frequent flyer, moving from one bank to another. They are more focused on their ranks and package enhancement rather than acquiring skill, knowledge and experiences. If the trend continues, Mehmood fears that the industry will face a severe leadership crisis in near future.

Despite the constraints, the banking sector registered sizable growth in deposit, advance, import and export in the year 2011. At present some 47 banks are operating in the country. As per 2010 Household Income and Expenditure Survey only 1.52 per cent of total loans were given by private commercial banks.

Taking this information into account, Mehmood said that a limited number of new private commercial banks may enter into market to accelerate financial inclusion for combating poverty by small deposit service, financing the ‘missing middle’, channelling foreign remittance of poor migrant workers, etc.

Regarding the high lending rate, he said undoubtedly it is high, but this is not the only reason which impacting growth of industrialisation. Rising global inflationary situation, higher raw material cost, lack of electricity and gas are also negatively affecting the country’s industrial sector.

The fundamentals that are being considered for loan pricing are cost of deposit, operating expenditure and risk premium. Thus, we have to take care of all these fundamentals to reduce the loan pricing and for this we have to ensure stability of capital market, mitigate the liquidity pressure in money market, speed-up inward remittance flow and balance devaluation of Taka against US Dollar, etc.

The managing Director, having working experience in all three generation private commercial banks, joined Bank Asia in August 2011. He dwelt in details the governance pattern, leadership style and behavioural approach in all three generation banks.

As a third generation bank, Bank Asia also performs well and secured 14th position among all private commercial banks. The Bank also believes in giving back to the community. The Bank continues its efforts to look beyond short-term quantitative gains, and concentrate on issues that make the institution socially responsible.

In 2011, the Bank spent Tk. 26.10 million for CSR activities, which included Tk. 15.59 million in education sector that benefited some 2,500 students, Tk. 1.43 million in health sector that benefited around 10,600 people (mainly children) and Tk. 9.08 million in disaster management, environment protection, sports, art and culture patronisation.

The Bank provides the same quality services both in rural and urban areas. It has been playing an active role in disbursing Agricultural and Rural credit through its rural branches as well as NGO networks. For providing micro credits, they are jointly working with some NGOs.

In current fiscal (2011-2012), the Bank has a target to disburse Tk. 1,510 million as Agriculture and rural credit, out of which about 63 per cent has already been disbursed. The Bank has 70 branches all over Bangladesh; out of which 17 branches and 4 SME and Agri branches operating in rural areas. This constitutes 30 per cent of the total branches.

In the year 2011 the Bank provided Tk. 54 million for importing and installation of Solar Home Systems in different rural off-grid areas through NGOs. This solar power program has benefited around 1,600 rural houses.

The Bank also provides remittance disbursement service to rural people all over Bangladesh through 21 rural and SME and Agri branches, 2,000 outlets of its 7 partner NGOs and also through Eldorado network which is a 10-bank web based remittance processing system. The network is continuously increasing.

The lack of infrastructural development reflected by poor transportation facility and shortage of energy supply is the major challenge for SME growth in Bangladesh. Still, SME is one of the most promising sectors in terms of employment generation and contribution to national GDP. Bank Asia has been sincerely putting its effort to increase SME services. At the end of the year 2011 the SME portfolio stood at Tk. 2,405 million which registered 12.26 per cent growth.

With a view to bring qualitative development in SME sector Bank Asia financed Tk. 2.6 million at Rajanagor thana of Munshigonj to make bamboo and cane handicrafts which generated direct and indirect employment for some 450 people in the vicinity.

Bank Asia is planning to finance small and medium software companies, farming and raw leather manufacturing units. The Bank believes, that  in coming years, the SME portfolio of the Bank will move upward significantly.

Regarding measures taking to reduce non-performing loans, Mehmood said, the Bank are very careful to prevent bad loans from happening. A good loan may turn to non-performing ones due to lack of proper monitoring and supervision. To prevent bad loans Bank Asia selects its credit customers very prudently and diligently.

“We assess credit worthiness of our customer by applying various risk management tools; then we determine what type of loan products would be suitable for the customer in a given scenario,” said Mehmood.
Once the Bank starts doing business with a customer, it tries to stay together for longer period in good time (booming business) and as well as in bad time (loss scenario).

In good time the Bank applies cautious monitoring to prevent any fund diversion and in bad time it strengthens supervision for optimal utilization of fund by the customer.  With these initiatives Bank Asia was able to restrict NPL (non performing loan) ratio at 2.72 per cent of total loan portfolio as on balance sheet date in 2011.

Regarding qualities of a banker, he said that a banker must understand that the banking sector is directly connected with national economy; every decision taken by them may have positive or negative impact on the country’s overall economy. He should also have sufficient knowledge about the shifting of dynamics of global economy and technological innovation which leads the global business.

A banker must know his customers and their business needs. Accordingly, he will be able to exploit the business potentials of his country and cater technology driven products and services for the benefit of his customers.

The Independent/Bangladesh/ 9th April 2012