Banking sector hit hard by chain reaction of COVID-19
_Tanvir Shams01 Sep, 2020 | 693 Views|-+
Syed Waseque Md Ali
It is clear that the banking sector of Bangladesh has received a sharp blow by a chain reaction of the novel coronavirus pandemic. Because at the beginning, the garment industries of the country which are financed by banks faced disruption in the process of shipping and subsequently could not deliver finished goods following the global virus outbreak.
As a result, it left a significant impact on the export trade of our country which eventually led to a harmful chain effect witnessed in the banking sector.
Syed Waseque Md Ali, Managing Director of First Security Islami Bank Ltd (FSIBL) said this while talking to The Bangladesh Monitor recently.
Another sector that has been hit hard by the coronavirus spread is the hotel industry. That, too, will further effect FSIBL since it has financed two leading hotels in the capital, mentioned the Managing Director.
On the other hand, Bangladesh Bank has recently imposed a new highest profit rate for investment which is 9 per cent effective from July, 2020. However, according to Ali, this creates certain difficulties since not all borrowers can be offered the same amount.
"There are two kinds of borrowers: good and bad. A good borrower certainly deserves to have 9 per cent as well as some incentives. However, the willful defaulters should not be allowed to have the same treatment," he added.
Moreover, FSIBL needs to lower its cost of fund and make it compliant with the new policy to implement it. This will bother the depositors when they will see their return has drastically decreased.
On the other hand, Bangladesh Bank has not set any rate for the highest deposit yet. Despite that if all the banks begin to offer the same rate, customers will have a harder time to distinguish which bank to take an investment from, Ali further added.
"This may create inconsistency in the market since we are in a competitive age. You must ensure people acknowledge your strength and acceptability in the society. So the balance sheet of the bank has to be better than before. Also the fact that each bank has a different appetite has to be taken under consideration."
The Managing Director also mentioned that when the government will withdraw the public funds from the banks and take them to the Finance Ministry for redistribution, as it has announced, the banks will suffer in the meantime since the funds account to billions of takas.
Another concern for banks currently is non-performing investment (NPI), addressed Ali. "Today the rate of NPI has increased in the country. As a solution, the laws must be made banking friendly. To ensure circulation of money, banks must recover bad investments. Only then they will be able to decrease the cost of fund."
To this purpose, the Managing Director also urged the government to bring "under the mattress" money into circulation.
In efforts to equip themselves with fintech, FSIBL operates its own FSIBL Cloud App. The accountholders having android/ios version smart phone can download the app from Google Play/Apple Store on their smartphones and without any charge can avail different exclusive banking facilities from their comfort of home such as checking statement and balance, transferring funds from one account to another account within the bank and to another banks account with the help of BEFTN and Real Time Gross Settlement (RTGS) system, fund transfer option to Bkash and paying all sorts of utility bills - DESCO, WASA, PDB and REB etc. It is mentionable that FSIBL Cloud App is a secure mobile banking app as it is installed in clients smart phone on the basis of each mobile's IMEI number.
To note, Dhaka WASA has recognised FSIBL to be the highest number of bill collector as well as highest amount of bill collector among 28 banks who serve the authority.
"We are charging neither WASA nor customers for this service. This is just to give back to the community," said Ali.
In addition, the bank has a mobile financial service named FSIBL Sure Cash. One of the most popular facility, customers avail from the platform is paying their children's school tuition fees. There are 60 schools under the platform at present.
FSIBL is heavily involved with carrying out CSR activities, claimed the Managing Director. FSIBL spent BDT 43.00 crore in corporate social responsibility activities and scored third position out of top five banks during the period January-June 2020, out of which BDT 12.20 crore disbursed at health sector, was the highest among all banks.
The bank offers monthly scholarship to 60 students of Business Department and to 25 students of other departments of University of Dhaka. Among these students, 70 per cent is female since it more difficult for them to do tuitions at night due to social constraints, expressed Ali.
FSIBL also offers monthly scholarship to 500 school and 500 college students.
In sports, the bank sponsors rugby, hockey and golf tournaments of all levels every year.
Health is another sector the banks contributes to but in a low profile. It also donates to Prime Minister's relief fund for tackling natural disasters and for distributing blankets among the poor in winter.
Currently, the bank offers VISA debit cards only. However, the Managing Director expressed hopes to launch credit cards by the year 2020.
Agent Banking, Uposhakha
The bank is also concentrating on agent banking, claimed the Managing Director, having close to 50 agent banking outlets all over the country.
Another focus of the bank is currently opening uposhakhas. Since it will be expensive for a bank to open a new branch near another branch, it rather opens a uposhakha - a booth in a 1000 sqft space - run under the management of a complete branch nearby. Bank is now operating 07 uposhakhas and another 08 uposhakhas are going to be opened within September 2020.
"We are targeting to have 50 uposhakhas by the end of the year 2020," said Ali.
He also believes uposhakha to be a great driver to bring "unbanked" people under the banking umbrella. "The rural unbanked people can now take investments from a bank instead of an NGO at a high profit rate."