Meghna Bank Limited is diversifying its investment portfolios with focus on retail and small and medium enterprises (SME) business to minimize risk, the bank's top executive has said.
Under the plans, the investment in retail and SME will reach at 50 per cent of its total loans and advances within the next two years from the existing level of 30 per cent.
"We're now working to enhance our investment in retail and SME sectors aiming to facilitate the ongoing financial inclusion initiatives through bringing more un-banked people in the banking network," Sohail R K Hussain, Managing Director (MD) and Chief Executive Officer (CEO) of Meghna Bank disclosed while sharing his future business plans in an exclusive interview with the Financial Express (FE) recently.
The fourth generation PCB commenced its operation from May 09, 2013.
Meghna Bank has already taken a series of measures including digitization aiming to transform the PCB into a robust as well as specialized bank by 2023.
"We want to go forward with a modern banking system with offering various innovative products and services to attract more customers in the coming days," Mr. Hussain said while replying to a query.
As part of the plans, Meghna Bank is already strengthening its different channels like digital financial solutions, mobile app based solutions, agent banking and internet banking to provide faster services to the clients using modern technologies.
Meghna Bank plans to extend services to the doorstep of its valued customers across the country using the latest financial technology (FinTech) in near future, according to the CEO.
"We'll leverage digital solutions to onboard customers at lower cost which will complement the activities of its 'Brick and Mortar' branch network," he noted.
"We'll provide 40 per cent of our services over Fintech platforms in the near future," Mr. Hussain said while replying to another query.
He also said Meghna Bank has already established a separate division to manage digital banking properly.
Mr. Hussain joined Meghna Bank on April 22, 2020 to facilitate the transformation process of the PCB by applying his previous experience in the field.
Mentioning various innovative products and services, the senior banker said a free health insurance facility will be provided if someone opens a savings account or fixed deposit accounts with Meghna Bank.
"It is a very successful product during the ongoing Covid-19 pandemic. No bank currently offers such a facility to their clients covering the range of its deposit products", the CEO noted.
Meghna Bank is also offering Sreyoshi savings accounts for women customers with insurance coverage from 18 types of health issues free of charge, he added.
Besides, Meghna Bank's customers are allowed to use 11500 ATM (Automated Teller Machine) booths across the country free of charge, he added.
The CEO also said: "We've already launched OBU (Offshore Banking Unit) to facilitate foreign currency unit trade support for domestic customers."
Meghna Bank has also opened its Islamic Banking window to provide Shariah-based services to the customers, he said, adding that nine more Islamic Banking windows will come into operation by the first quarter (Q1) of 2022.
Besides, Meghna Bank has planned to raise Tk 1.50 billion through Initial Public Offering (IPO) subscription by 2022 to expand the capital-base of the PCB.
This is in addition to additional capital between Tk 1.0 billion to Tk 2.0 billion, being raised from existing shareholders, according to the CEO.
"Our CRAR (capital-to-risk weighted-asset ratio) is currently around 16 per cent. We believe in building a strong capital base in excess of 18 per cent. Strong capitalized banks will be in a better position to serve their customers in the post pandemic era," he noted.
Mr. Hussain also spoke on different issues including execution of the government announced financial stimulus packages, future challenges for the banking sector, non-performing loans (NPLs) situation and managing liquidity in the near future amid the Covid-19 pandemic.
Regarding the financial health of the bank, the CEO said Meghna Bank has earned Tk 970 million as operating profit in the first nine months of the current calendar year compared to Tk 240 million in the same period of 2020. "Such good results will continue."
On the other hand, the share of NPLs in the total outstanding loans of Meghna Bank came down to 5.2 per cent in 2020 from 7.6 per cent two years back.
"We've planned to keep extra provisions against loans to face possible challenges in the banking sector in the post pandemic era," the senior banker said while replying to a query relating to future challenges in the banking sector.
As per the regulations, all the scheduled banks have to keep 0.25 per cent to 2.0 per cent provisions against general category of loans, 20 per cent against substandard category, 50 per cent against doubtful loans, and 100 per cent against bad or loss category of loans.
The banks usually keep the required provisions against both classified and unclassified loans from their operating profits to mitigate risks.
The CEO expects that the board of directors of Meghna Bank will agree to receive a lower dividend by the end of this calendar year to support the bank.
Mr. Hussain, also former vice chairman of Association of Bankers, Bangladesh (ABB) has sought judiciary system reform to speed up the recovery process of classified loans, saying that it would also help improve financial health of the banks.
"The quality of audit along with stronger due diligence, post disbursement monitoring as well as expanded use of arbitration as a way of resolving disputes with customers will have to be improved to curb the rising trend of default loans in the banking sector of Bangladesh," the senior banker said while explaining how to face the challenges of NPLs.
The arbitration act needs to be amended in this regard, he said, adding that a joint team of ABB, BIAC (Bangladesh International Arbitration Centre) and central bank has already submitted recommendations to the Bangladesh Bank (BB) in 2019.
Meanwhile, the amount of classified loans in the banking sector increased significantly in the first half (H1) of the current calendar year despite providing policy support by the central bank.
The volume of NPLs grew by nearly 12 per cent or Tk 104.71 billion to Tk 992.05 billion as on June 30, 2021 from Tk 887.34 billion six months ago, the BB's latest data showed.
Currently, Meghna Bank serves a large customer base comprising individuals and institutions through a network of 47 branches across the country.
siddique.islam@gmail.com