Dhaka Bank to expand businesses embarking on SME, digitisation

Dhaka Bank will decentralise its loan concentration from corporate to retail and small and medium enterprises (SME) to minimise credit risk, said the top executive of the leading private commercial bank (PCB) recently.

The second generation PCB is also aiming to bring more trailblazing digital products in its banking procedures shortly, its Managing Director and CEO Syed Mahbubur Rahman told the FE in an interview.

The bank celebrated 24th anniversary on July 5.

The loan portfolio of the bank now is heavily concentrated on corporate sector, which is around 80 per cent. Corporate loan in the bank was around 90 per cent a few years back.

"Currently we have 14 to 15 per cent loan in SME sector, we want to extend the share to 30 per cent, and our plan is to make retail loan 20 per cent of total loan," he said.

The bank has taken a lot of measures to increase its share in retail those include introduction of credit cards with many never-before-seen offers, OTP for e-commerce transaction, bank to MFS integration, a number of new apps.

The bank has recently introduced i-khata-- a digital CMSME business solution of web-based book-keeping accounting register.

Mr Rahman said i-khata will empower the customers to maintain structured and comprehensive financial records and business activities, replacing maintenance of multiple 'kaacha khatas', making it much easier for generating necessary business statements.

He said i-Khata is a dependable financial tool to have better control for record keeping and monitoring of various business activities and increase efficiency having accurate updated business information.

The Dhaka Bank MD, also the chairman of Association of Bankers, Bangladesh (ABB), said Dhaka Bank- led SME customers are updated in 24 hours whether they would get loan or not.

He said they introduced a new block chain cloud system to deal trade-based banking procedures to keep entire trading process transparent.

"A few business houses have already started to use the cloud and it will be very popular in future," he said adding that this cloud will help check trade-based money laundering.

Rising amount of non-performing loan has long been a major concern for the country's banking sector.

Mr Mahbub, observed that enforcement of law is crucial for addressing the growing non-performing loans-NPL volume in the banking industry of the country.

He said political willingness is a must to contain the growing NPL volume.

"Pending of a huge number of cases in our judicial system means that it takes eight to ten years to settle a case and some wilful defaulters abuse this advantage", he said.

"This is where the banking sector, judiciary, regulator and the government need to work together".

"There are also some areas of reform. For example, there is no separate bench in the High Court to deal with loan default. At the same time, there is also a lack of competent judges to deal with loan default issues", he noted.

The ABB chairman suggested all banks should deal the NPL issue dedicatedly and professionally.

He also said loan defaulters should face the music and they should be prevented from enjoying some social advantages and state functions.

Dhaka Bank currently has 4.0 per cent NPL until last December.

About single digit interest, he said the bank can't introduce single digit interest while it takes deposit at a very high rate. The banks will not sustain if it introduces single digit interest rates under the present context.

"We provided single digit interest until 2017 without any pressure or direction as there was liquidity surplus and presence of low rate of deposit," he said.

Syed Mahbubur Rahman cautioned that the ongoing appreciation of US dollar against Taka is likely to continue if the export does not get a major boost.

He said this is because the import is likely to rise as the price of oil is going up in the international market while the country will also import LNG and LPG in the coming months. Notably, these are all essential items.

"We need to diversify our export basket while exploring new markets in the emerging economies", Mr Mahbub said.

Dhaka Bank started its journey back in 1995 and got listed on both the bourses back in 2000.