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

A two-day ‘Indian Ocean/South Asia Mobile Payments and Banking Summit 2012’ will begin in Colombo on January 31, aiming to address the challenges, strategies and regulatory frameworks to step up mobile payments infrastructure in South Asia.

The upcoming summit will tackle the unique prospects and challenges for mobile payments in the emerging economies of Sri Lanka, India, Pakistan, Bangladesh and Nepal, said a release on Saturday. Magenta Global Pte Limited, a premier independent business media company that provides pragmatic and relevant information to government and business executives and professionals worldwide, will organise the event. 

The summit is supported by the Electronic Money Association, Prepaid International Forum, SIMalliance, Mobile Entertainment Forum and Global Platform.Bangladesh’s leading English daily the Independent is the media partner of the event.  

Some 70 percent of the South Asian population does not have access to mainstream banking though mobile penetration has achieved a significant growth with the 86.6 percent penetration rate in Sri Lanka, the highest in South Asia, according to the release.

Recognising that the rural masses present a huge opportunity for banks and retailers, banks and telecom operators must come together to offer innovative solutions to tap this emerging market, it said. Case studies of Easy Paisa, Global Desi, SMS-based bill payments and micro-credit transfers amongst others will be presented at the summit. 

It will also be a converging point for key players from the telecommunication, information technology and banking sectors to come together and share new insights. Speakers at the Summit include top representatives from the Central Bank of Sri Lanka, Pakistan Telecom-munication Authority, Bharti Airtel, Etisalat Lanka, Bangladesh Bank, CityCell, Sampath Bank PLC, Nepal Telecom, ICICI Bank, LIRNEasia, MCB Bank and Dhanlaxmi Bank.

Times of Money, a provider of digital payment solutions, and Analogics Tech India, a turnkey solution provider, are the associate sponsor and participating sponsor of the Summit respectively.

CEO of the conference organising company, Magenta Global, Singapore, Maggie Tan said, “The growing trend towards mobile banking cannot be ignored.South Asia with its huge untapped rural masses must capitalise on its potential. How to access banking securely and conveniently with the mobile phone is the key to its growth. The partnership between cellular operators and banks will provide unparalleled revenue opportunities.” 

The Daily Independent/Bangladesh/ 15th Jan 2012

The judge-in-chamber of the appellate division Thursday issued an order for re-instating 11 directors of Social Islami Bank Ltd. in their posts. 

The High Court earlier Monday restricted functions of the SIBL directors for allegedly holding the offices for 16 years defying the law.

Thursday's order also directed to maintain status-quo, according to Md Ibrahim Khalil, advocate-on-record of Supreme Court.

The directors are -- Anisul Hoque (representative of Hamdard Lab), Abdul Awal Patwari, Sultan Mahmud Chowdhury, Nasir Uddin, Sheikh Md Rabban Ali, Sayeedur Rahman, Jabbar Mollah, Faisal Ahmed Patwari, Noor-A-Alam Chowdhury, Lily Amin and Md Azam.

The Daily Financial Express/Bangladesh/ 13th Jan 2012

Country’s public and private sector banks and non-bank financial institutes have received a total of US $ 249.83 million as remittance in the first week of the current month of January.

Among the private sector commercial banks, Islami Bank Bangladesh Ltd (IBBL) has received the highest amount of $ 73.35 million in the said period while four state owned commercial banks, Sonali, Agrani Janata and Rupali together have received $ 62.79 million.

Among the government-owned banks, Sonali received $ 17.64 million, Agrani $ 22.75 million, Janata $ 21.29 million and Rupali $ 1.11 million.

Among two government-owned specialised banks, Bangladesh Krishi Bank (BKB) has received $ 2.29 million while Basic Bank received no remittance in the said period.

The received remittance of nine foreign banks amounted to $ 2.48 million while 30 private sector commercial banks have received US$ 181.64 million.

As per the account of the Foreign Exchange Policy Department of Bangladesh Bank, in 2010-11 fiscal year the country bagged a total of $11,950.31 million as remittance while the amount was $6065.46 million in July-December period of the current 2011-12 FY.

The Daily Sun/Bangladesh/ 13th Jan 2012

Bangladesh Bank (BB) yesterday for the first time released data on interest-rate spread to increase competition among banks and help consumers get services at a lower cost.

The interest-rate spread is the difference between lending and deposit rates. An increase in the spread means the banks gave lower interest rates to depositors but charged higher rates from loan seekers.

The bank interest rate spread increased in 2011, compared to 2010, which is one of the reasons behind hefty profits that banks made last year, according to data from the central bank.

“The inclusion of the bank interest rate information on our website is part of the Bangladesh Bank Open Data Initiative whose aim is to promote easily downloadable access to economic and financial sector data,” said Hassan Zaman, senior economic adviser to the central bank governor.

“This sort of data dissemination can strengthen consumer awareness and hopefully promote healthy competition in the banking sector,” he said.

“The BB step is good but it is not sufficient,” former BB governor Salehuddin Ahmed said.
The spread should remain below 5 percent. If the spread of any bank is higher than that, the central bank must intervene, Ahmed added.

In the Bangladesh context, opening up everything in the name of free-market economy will not be proper, he said.
The spread of all banks increased 0.07 percentage point to 5.23 percent on average in November 2011, compared to December 2010, central bank data showed.

The interest rate spread of many banks was above 6 percent, according to data on individual banks. The spread of most foreign banks is much higher.

Zaman said the high interest spread can be justified for some banks because they have a larger share of SME lending, but there are certainly scopes for some other banks to reduce the spread.

The spread of state-owned commercial banks was much lower about one and a half years ago but it has started to increase now. But it is still below 5 percent.

A high official of Agrani Bank said the state banks compete with private banks. As a result, they are forced to increase the interest on deposit and lending.

In 2011, many thought that Bank profits will be much lower due to a fall in their profits from the share market, but in reality both the public sector and private banks made good profits. Most of the banks made more profit in 2011, compared to 2010.

In addition to the high spread, the Banks made good profits from the foreign exchange market, Ahmed said. The commission charged by the Banks is much higher now.

The Banks normally give less interest to the depositors and charge more in case of lending, he said. BB will have to continuously monitor the situation so that the Banks do not give lower interest rates to the depositors and charge more form the borrowers.

Many bank officials said the central bank withdrew the lending cap recently, which will increase the lending rate in 2012. In addition, to collect deposits, the banks will embark upon stiff competition, pushing the deposit rate up.
The managing director of a private bank said the government has taken an initiative to allow a number of new private banks to be set up, which will further increase competition.

The Daily Star/Bangladesh/ 13th Jan 2012