In an exclusive interview with the Dhaka Tribune's Mehedi Hasan, Managing Director and CEO of the recently approved Community Bank Bangladesh Ltd Masihul Huq Chowdhury, speaks about the bank's vision and the challenges it faces as a new bank in Bangladesh's banking sector.
Masihul started his career at the American Express Bank in 1992, after obtaining a Master of Business Administration (MBA) degree from the Institute of Business Administration (IBA), Dhaka University.
During his 26 year-long career, Masihul has worked for Standard Chartered Bank, Citi Bank, IPDC Finance and other leading financial institutions both in Bangladesh and abroad, and also served as an adjunct faculty member at Brac University.
As the first Managing Director (MD) and CEO of Community Bank Bangladesh, what are your plans for the organization?
Community Bank Bangladesh is the 59th scheduled bank of the country and we obtained our licence on November 1, 2018. The bank is fully owned by the Bangladesh Police Kalyan Trust [Bangladesh Police Welfare Trust], and its capital was formed with a portion of the salary of the country's police officers.
The bank intends to contribute to the community we live in and to enrich the lives of our country’s 200,000-member-strong police force. We will also open the door to the general public, and have features that will differentiate us from the other 58 banks.
What features will differentiate Community Bank from other banks?
Our board of directors is comprised of the IGP [Inspector General Police] and some other senior officials of the Bangladesh Police. However, unlike many other banks of the country, we will have independent directors to ensure good governance from the very first day. The independent directors will include a former DMD-level banker, an FCA [Fellow Chartered Accountant], and an academic.
Furthermore, we will appoint skilled professionals at our bank and emphasize on cybersecurity. Our core banking software will be the best in the banking sector. 'Trust, security, and progress' is our motto.
Which group of borrowers will your bank give priority to?
In Bangladesh, owners of small and medium-sized enterprises do not get loans at low interest rates. Fishermen and farmers in rural areas often borrow at high interest rates, as some MFIs [micro finance institutes] are ruthless lenders. Our aim is to work for these underprivileged people.
These people have a good track record regarding loan repayment. We will emphasize providing retail loans and microcredit to SME entrepreneurs.
How do you plan to help SME entrepreneurs?
We will have to create new markets by not lending too much credit in the same sector. New ventures and new entrepreneurs must also be welcomed. In the next five years, we wish to arrange a business plan competition in every region to encourage them.
Non-performing loans (NPLs) in Bangladesh’s banking sector are increasing. What is your opinion about that?
NPLs are a major problem in our country's banking sector. If there were no default loans, the dividends of banks would have increased. But banks are paying interest on deposits while the capital is stuck with defaulters.
Default loans are increasing due to a lack of good governance in banks. All banks in the country that have good governance are doing well. On the other hand, banks which do not maintain a good governance criteria are performing poorly.
It will be our policy to ensure that our bank does not have any default loans. Usually, customers who borrow large sums of money, take the bank hostage. In order to prevent that we will disburse limited large loans, and give out 75% of our total loans to SMEs and the retail sector.
Mergers and acquisitions are needed to discipline the banking sector. Legislative complications should also be resolved so that the defaulters do not go free and are given stern punishment.
What initiatives will you take for cybersecurity?
We will provide strict instructions to the officials so that and train them to prevent any sort of data breach. We are also planning to hire a hacker to prevent hacking.