How would you evaluate the banking sector as the sector is facing various challenges owing to the Covid-19 pandemic?
Banks are a vital part of the economy and our economy is fully dependent on the international economy as we are a highly import based country. In such a situation, when the world is facing an invisible enemy, which impacts our economy.
For the past year and a half, our sourcing and exporting countries were shut down owing to the global recession created by the pandemic. The country’s banking sector faced various challenges as money circulation has fallen amid the pandemic because people suspended their luxurious cost.
The informal sector, as well as the cottage, micro, small and medium enterprises (CMSMEs), which are the backbones of the economy, have been suffering owing to the countrywide shutdown.
Most of the vibrant sector was negatively impacted by the pandemic, many people lost their jobs, many of them moved from Dhaka to their villages.
Amid the depressed economic situation, almost all the banks declared dividends owing to the flexibility on loans classification offered by the central bank. If the ongoing pandemic situation continues for a long time, then the country’s banking sector would face bigger challenges than it is witnessing now.
What kind of challenges does SBAC Bank face as a fourth generation bank?
Imposing a bar on lending rate negatively impacted fourth generation banks as the shock absorbing capacity of those banks is low. New generation banks mobilize deposits at higher cost than other banks to attract clients. As a result, those banks have been more affected than other banks owing to the implementation of single digit lending rate. The ongoing pandemic created the situation more difficult for the new banks.
However, we overcame the difficult situation and we are moving forward consciously.
Amid the pandemic, most of the banks emphasize their focus on agent banking and sub-branch banking to minimize operational cost. What do you think?
This is correct that there is no alternative without establishing agent banking and sub-branch banking for reducing establishment cost, as opening a new branch is costlier than opening a new agent banking branch or sub-branch.
We already got the central bank approval to operate agent banking and we want to open 100 agent banking booths to the southern region by this year. SBAC Bank wants to provide banking services to the country’s unbanked people as more than 50% of the population remains unbanked in the country.
What are your future plans for the bank?
It is the positive side of the pandemic that people now are used to electronic transactions. We will diversify our banking services in the upcoming days. Owing to the increasing demand of the clients we will bring mobile financial services soon.
In the upcoming days, people will be able to open their bank account in our bank at home and they also will be able to apply for a letter of credit (LC) for trade financing from home.
We already got the central bank approval to open Islamic banking windows in ten branches.
When the central bank withdraws the deferral facility on loan classification, the banking sector will be faced with another challenge. Is the sector prepared to deal with this?
Good customers continue to repay their loans despite the central bank deferral facility on loan installments but the clients who have bad intentions are not repaying their loans and they are also taking the central bank facility.
Amid the pandemic, maximum industries are open and they are continuing their production. In such a situation, the clients not wanting to repay bank loans are willful defaulters.
The clients that are now taking the central bank facility would not repay their loans even if the deferral facility is lifted. So now we have to increase the monitoring of them. If the banking sector collapses, the whole economy will collapse and people lose their confidence in banks.
SBAC Bank has been approved for IPO from the Bangladesh Securities and Exchange Commission (BSEC) recently. What is the latest update?
We will raise Tk100 crore through the capital market. The IPO subscription will start from July 5 and will end on July 11. Hopefully, the bank's transactions will start in the first week of next August of this year.
We believe that the listing of a bank in the capital market will increase our accountability, thereby ensuring greater transparency in every activity of the bank.
The bank’s accountability, transparency, governance and reputation will increase further through listing with the country’s stock market and the bank is going to enter a young life. It is a big opportunity for us to grow further.
