Abu Sazzad :
The Managing Director of Meghna Bank Ltd, Mohammed Nurul Amin, has underscored the need for ensuring political stability and institutional reforms with a view to establishing good governance in the banking sector as well as boosting the economy of the country.
The establishment of good governance in the financial sector and the institutions would help attain sustainable economic growth, said the managing director in an exclusive interview with The New Nation on Tuesday.
“It is not possible to ensure proper development without strengthening the country’s institutional capacity and good governance,” said Nurul Amin, who is currently the chairman of Bangladesh Foreign Exchange Dealers Association (BAFEDA).
The unresolved political uncertainty is hurting the growth prospects by hindering confidence rebuilding, leading to a stagnation of private investment.
The domestic risks, including political uncertainty, constraints in infrastructure and institutional reforms, and financial sector vulnerability, are hampering the investment and productivity, he said.
There is a close relation between financial and political stability. Both things are crucial for investors and smooth trade to sustain the growth momentum and the impressive feat in lowing poverty.
Actually, he said, the big borrowers are not showing their keen interest to expand their business due to lack of trust for smooth business environment. The large-scale borrowers are reluctant to implement new projects rather they are thinking for operating their existing business. The private sector investment is declining for unresolved political issues.
“Of course, we have to resolve the political issues immediately for gaining the trust of the businessman, else the economic growth would hamper,” said the managing director.
He said, “Cost of doing business is increasing day by day, businessmen are failing to minimize total expenditures. Finding no other alternative, the businessmen are failing to repay their loan installment timely; simultaneously the default loan is increasing in the banking sector.”
Classified loans are hampering the health of the banks. Banks have to keep 20 per cent sub-standard loan funds to the central bank, followed by 50 per cent for doubtful loans and 100 per cent for bad and loss loan, he said.
The big borrowers have been occupying the lion share of default loan due to dull business amid political unrest of the country since long. “The rich are careless to repay their loans and mostly they received loan reschedule facilities under the instruction of the central bank, but ultimately the banks are losing their interest and the profit of the banks is declining for this reason.”
As far as the size of the default loans in the country’s banking sector is concerned, the situation was not that bad until the end of 2011, but the situation really turned bad from 2012 because of the detection of some large loan scams, particularly with the state-owned banks.
“We have to take initiative to reduce the non-performing loans at any cost as the classified loan is foiling the capacity and reputation of a bank”, he said.
Law and equality should be same for all, he opined. He underscored the need for improving the efficiency of the Artho Rin Adalot. Cases are filling but the court failed to give the quick result of the financial scams, he claimed.
Loan facilities under political consideration and boards of directors are responsible for increased bad loan culture in the banking sector, he claimed. “It is good news for our economy that now maximum banks are offering between 13-15 per cent interest.”
Bangladesh Bank (BB) has been encouraging private commercial banks to reduce the lending rate to ensure GDP growth target by increasing inflow of credit to the productive sector, he said.
He appreciated the central bank’s move to making the list of corrupt bank officials because it is important to ensure justice and equity.
Talking about Meghna Bank he said, as a forth generation bank it is doing well. “Of course, we have a pressure to collect deposit but we have already overcome from it”, he said, adding the bank is strictly following the rules and regulations of the central bank, mostly the target of the monetary policy statement.
The bank started its journey since 2013. Now the bank’s paid up capital is Tk 443 crore and the total capital is Tk 460 crore. The asset of the bank stood at Tk 2000 crore. The deposit and advance stood at Tk 1600 crore and 1250 crore respectively. Total employees of the bank are almost 300.
Total branch of the bank is 20. Of them 50 per cent branches are in the rural area across the country. “We are planning to set up our branch in the former enclave areas to improve their livelihood”, he hoped.
The share of industrial term loan is almost 40 per cent and the lending rate is between 13-14 per cent. The industrial loan, including the corporate and trading, is important to expedite the industrialization process of the country, he opined.
But at the same time, the bank is giving more priority to disburse SME and Agriculture loan for boosting rural economy of the country.
The bank is encouraging the women entrepreneur to avail low rate (10 per cent) SME loan for empowering themselves in the society.
The bank is disbursing the agriculture loan through NGOs, as the bank has not enough branches in the rural area. The bank has targeted to disburse Tk 39 crore under agriculture loan; so far Tk 10 crore already has distributed this year.
The bank is distributing export development fund (EDF) for the exporters at the rate of 7 per cent. The central bank delayed to disburse the EDF to the bank, he claimed. He urged the central bank for making easy disbursement procedure of the EDF fund to facilitate the exporters.
The retail loan is playing a vital part for the development of economy. The bank has separate retail banking division, Personal loan, education loan and doctor’s loan are distributing from the division.
The bank has undertaken various initiatives to finance in the green economy. The bank recently approved Tk 15 crore to make two green brick fields at Dhamrai. Under the green banking initiative, the bank will finance more green projects across the country.
Already the bank has undertaken various CSR activities as part of its moral obligation. “I believe that CSR fund of the banks can enhance the underprivileged people of the country and we are spending at least 10 per cent CSR fund from our yearly profit.” The bank already spent Tk 2 crore from its CSR fund last year.
Moreover, the bank is planning to invest in the long term projects to attain a sustainable economy, said Nurul Amin .
Employment is one of the major problems of the country. Considering this, the bank has decided to disburse loam among the unemployed graduates who have a proper business plan, the managing director.
The bank has established anti-money laundering units to check the illegal financing. The tear is regularly reporting the suspicious transactions lists to the central bank, he said.
Skilled manpower can boost the economy, he said. The bank has already set up a training institutions in its headquarters to train the bank official. “We are regularly sending our officials to Bangladesh Bank Training Academy (BBTA) and Bangladesh Institute of Bank Management (BIBM) to produce efficient banker,” he said.
Mohammed Nurul Amin, who obtained honours and masters in economics in 1973 and 1974 respectively from Dhaka University, was the former managing director of NCC Bank and the Chairman of Association of Bankers’ Bangladesh (ABB).
