AB Bank is the first private bank in the country, which began operating from April 12, 1982. The bank has already passed 37 years
With the bank's strict position against loan defaulters, cases have been filed as per the Negotiable Instruments Act against all its big defaulters, said President and Managing Director of AB Bank Ltd Tarique Afzal. In an interview with Dhaka Tribune's Mehedi Hasan, he also discussed the bank's current overview, impending challenges and other issues.
He was appointed as President and Managing Director of the bank in July earlier this year. He had joined AB Bank as Deputy Managing Director. Starting his career in London in the late 1980s, Afzal served in Credit Union in Canada, ANZ Grindlays Bank and Standard Chartered Bank, both in Bangladesh and abroad. He also worked at Brac Bank, Bank Alfalah, and had also represented Dun & Bradstreet in Bangladesh as its Country Head.
What is the current status of AB Bank?
AB Bank is the first private bank in the country, which began operating from April 12, 1982. The bank has already passed 37 years. Over the course of time, the bank has been developing gradually. The bank has also come up with many ideas for modern services in the country's banking sector. We reduced bad loans by 15% between January to September this year.
Earlier this year, AB Bank's deposits and loans were almost equal. But now, we have reduced the loan-deposit ratio to 85% as per Bangladesh Bank’s instructions.
The amount of deposit is increasing gradually. The deposit of this bank was at Tk24,000 crore in December last year. Currently, the deposit stands at Tk27,000crore.
What are you doing to reduce default loans?
Our bank is strict against loan defaulters, and cases have been filed under the Negotiable Instruments Act against all the big defaulters. Willful defaulters should be called criminals. Now we are not going to apply the Money Loan Court Act; it wastes our time. That is why we filed the case as per Negotiable Instruments Act.
Already we have taken various measures against loan defaulters. A Dhaka court on September 16 issued an arrest warrant against Ershad Ali, a trader of rod and cement in a case filed by us. We also filed cases against other big defaulters. The arrest warrants will be issued within a week or two. In total, 271 cases have been filed against loan defaulters.
We will force top defaulters to pay back their loans. Willful defaulters are our main target. The legal process against the willful defaulters will be further strengthened. We want to establish that the bank’s money must be returned.
What are the challenges in bringing lending rates to single digit?
There is an unhealthy competition in our banking sector. Banks can lend at an interest rate of 9% if they collected deposit at 6% interest. But if the bank has to collect deposits at an interest rate at 9 to 11%, then it is not possible for the bank to lend at single digit interest rates. In order to get a stable and healthy banking sector, good governance has to be implemented.
However, AB Bank has started lending on single digits interest. We are disbursing at 9% interest rate in agricultural loans.
There have been a number of changes to the board of directors and management team of AB Bank. How do you evaluate the changes?
The Board of Directors has been restructured with honest, skilled and competent bankers. AB Bank has had two former deputy governors of Bangladesh Bank. Former Deputy Governor of Bangladesh Bank Muhammad A. (Rumee) Ali has become chairman of the bank. Former Deputy Governor Ziaul Hasan Siddiqui was also with us, until he was appointed chairman of Sonali Bank.
A former managing director of AB Bank and two lawyers are also members of the board. A timely board has been formed with banker-turned-lawyers. A new DMD has also arrived. The ongoing reforms will continue. We want every worker to work with due diligence. A message has been sent to all staff, to speed up working with integrity. I want to put the right people in the right place.
What are your future plans?
We are looking at a beautiful future. Now the deposit stands at Tk27,000 crore in our bank. We disbursed over Tk24,920 crore in various sectors. We are serving customers through 105 branches, 270 ATM booths and agent banking. At present, agent banking is our focus area. We have also introduced Islamic banking services.
We have successfully managed to bring down AB Bank’s non-performing loans to around Tk5,000 crore in the first half of the current year from Tk7,900 crore at the end of December, 2018. The bank has planned to pull down its NPL to Tk4,000 crore by this year.
AB Bank's commercial loan is high. However, we have taken initiative to diversify the bank's loan portfolio. Investment in retail banking, like personal loans, home loans and car loans will be increased. At the same time, investment in small and medium enterprises will increase.
What kind of initiatives have you taken to create new entrepreneurs in the country?
We have taken several initiatives to create new entrepreneurs in the country. We want to disburse more firm loans than the central bank's set target. AB Bank is one of the leading banks in regard to lending to women entrepreneurs. We have launched agent banking to provide banking services to the marginalized people of the country. Fifty one agent outlets have already been opened. We want to go to the doorsteps of the people; this will be possible through agent banking.