‘Our concentration of focus should go towards the “unbanked” population’

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Muklesur Rahman, Managing Director of NRB Bank Ltd, talks about his perspective on banking tidbits, areas of interest and more

By Wafiur Rahman

Photos by Din M Shibly

Muklesur Rahman is a veteran banker with more than 29 years’ experience in reputed local and foreign banks. Prior to joining NRB Bank, he served various senior management positions in various local and global banks. Commencing a career with United Commercial Bank in 1984, he gradually moved up the ladder by serving top global banks such as Standard Chartered, ANZ Grindlays, Citi NA in various senior management capacities leading large teams in areas spanning branch management, retail, SME, operations, distribution, compliance, foreign trade, project management, etc.

In his long career, he has successfully led some large projects including a mammoth core banking system migration at Eastern Bank where he led from the front as the Chairman of the Steering Committee of the project. He has attended numerous leadership, management development and learning programs at home and abroad and instilled international best practices in all entities he has served. He has brought numerous local and international accolades both for himself and for the organizations he worked.

What is your opinion about the current state of Bangladeshi banking sector?

Presently, there are 56 banks operating in Bangladesh – some state-owned, some private or foreign banks – with a combined amount of over 8000 branches across the country. Recently the state-owned banks faced the financial scam of Hall-Mark and Bismillah Group, which showed a lack of governance, transparency and accountability. On the other hand, most of the private commercial banks in our country have government structure and follow the operational/risk management guidelines of Bangladesh Bank in terms of prudential and management norms.

The policies and guidelines provided by Bangladesh Bank are well-formulated and are of international standard. In order to strengthen the capital framework of banks, they have already put Basel II in place and are already in the process of implementing Basel III, which was introduced in 2013 by Bank for International Standard (BIS) in Basel, Switzerland. The private commercial banks of Bangladesh contribute significantly towards the development of the economy of the country. Specifically, the growth in private sector industries and businesses and the private commercial banks’ contributions are remarkable. But under the present scenario of the country, all the banks are having challenges in their growth of businesses. We are assuming that mostly the SME industry of the country started facing disruption in their businesses, which may affect the loan portfolio of the banking sector.

What do you think are the biggest opportunities and challenges faced by the 4th generation banks such as NRB Bank Ltd?

Actually the timing of the beginning of the operation of these banks was not smooth, given the turmoil since 2013. Specifically, the investors are going slow and were in a stage of ‘wait and watch’. On the other hand, the deposit/lending rate of interest are in competition, which resulted in high cost of deposit and less rate of interest in lending. Thus, the spread between interest rate of deposit and lending is a challenge. Furthermore, these banks have to be very careful while lending to the borrowers, to keep their loan portfolio in good health. And in this case, borrower selection is the most important part.

We are the only bank among 4th generation banks who are operating under Centralised Process Management (CPM) by support functions like operation/service delivery unit, credit risk management unit, information technology unit, human resource and facility management unit, finance, internal control and compliance – all these with segmental business unit like retail banking, SME banking, corporate banking, treasury and investment banking. We are progressive but not aggressive in lending. We started our banking operation in 4th August 2013. Till 2014 we made the platform. This year we started focusing on doing business. We have already launched our retail and SME banking product suits along with debit/global debit card, credit card, internet banking and call center. We invested in technology and people, which are the key part to make the bank in a sustainable position as well as doing lending carefully. We always believe in sustainable growth. Presently, the challenges we are facing like less appetite of borrowing from the good borrowers.

On the other hand, there are three ‘NRB’ tagged banks which creates confusion among the customers and in the banking industry. Our opportunities are providing tailor-made products, standard service quality and developing entrepreneurship.

Do you feel that the market is oversaturated with too many banks these days?

We are a country of 160 million people. Having 56 banks in the country seems acceptable but our concentration of focus should go towards the ‘unbanked’ population, who do not have access to finance. Our present governor of Bangladesh Bank always emphasise in these areas. But we are all trying to concentrate our banking operations in Chittagong and Dhaka, all while sharing big and medium level corporate customers. We should concentrate on other parts of the country, by giving focus on entrepreneurship development and also providing support to young and women entrepreneurs.

What are your main areas of focusing? Do you have any plans on providing assistance to small and medium entrepreneurs? How important do you think is the role of Non-Resident Bangladeshis in the growth of Bangladesh economy, and also that of Bangladeshi migrant workers?

Our focusing area is, as mentioned above, entrepreneurship development, and also to bring Non-resident Bangladesh (NRB) investment in the country. We have already launched SME banking with of bundle of product suits, and also launched Bangladesh International, which includes all types of retail and investment products for NRBs. Very soon we are going to UK, Italy, Malaysia and UAE for NRB Bank road shows to gather attraction for our products and create awareness among NRBs. We are also promoting to our customers several alternate channels like internet banking, etc.

There are over 10 million NRBs across the globe. In the last five years, there has been significant increase in foreign direct investment (FDI), deducing their contribution to the economy. Definitely they are important, but we have to facilitate them by bringing their money and investing those in profitable venture.

Given the level of high competency in corporate culture today, do you think graduates should consider a career in banking today?

With a youth population of over 4.5 crore, aged between 20 to 35, it is not possible for the government to accommodate all of them in government services. We have all seen that job creation has been done by the private sector, the last decade witness lots of progress in that regard. Their contribution in the national economy and GDP stands out.

I think graduates should consider a career in banking. With over 56 banks and 8000 branches across the country, we are progressing to an age of digitisation, where we need more competent employees. We have approximately 200 employees, out of whom 80% are below the age of 40. Banking has changed, with lots of innovative products and services, which have also attained global standards.

Has the role of government’s financial bodies played an important part in helping new banks to proceed forward? What incentives have they provided in this regard?

Definitely the regulators such as Bangladesh Bank provide extensive support. They have also allowed lots of changes such as mobile banking, electronic banking transfers, all of which are revolutionary. Without them it would not be possible. I believe they should allow for a more level-playing ground for all the banks, with consideration to the state and condition of each banks.

As far as challenges are concerned, the income tax rate of 42.5% is quite a burden. With probable tax incentives and 25% tax holidays for banks who are eligible for such rewards, it can be a desirable incentive for us.

In almost 2 years of operations, do you think NRB Bank Ltd has succeeded in maintaining their vision/mission?

Our vision is to be the leading dedicated financial institution for NRBs to invest in Bangladesh and for Bangladeshi individuals and corporate to access international markets. Our mission is be the preferred provider of targeted financial services as a conduit for investment to and from Bangladesh for our Bangladeshi communities both domestically and internationally, to accelerate the industrialisation of Bangladesh. We will strengthen these relationships by providing the right solutions that combine professionalism, expertise and financial strength.

We have a vision for investment in people and technology, and thus far, I think we have succeeded in maintaining our vision and mission.

How important is CSR in your banking policies?

Although it is an important venture for all banks, I think it is a burden which should be considered by regulators. To have a fund of Tk. 400 crore from capital is quite a daunting task, instead, it should be taken from profit percentages. I hope the policy makers will consider this in future.

Where do you see the future of your bank a decade from now?

As per our vision, we want to maintain our global standard in banking, all while contributing to the development of the economy. Bringing NRBs for local investment is also in our agenda, we want to bridge both the local and international Bangladeshis together. Contribution towards the growth of the SME industry will always remain a priority, and most importantly, our initiative to make banking for all is every-growing in determination. Just like our brand promise, we are not just another bank.



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