All types of digital banking will be available in the bank from next year
Meghna Bank, one of the more recent entries to the country’s banking landscape, has trained its focus on automation and digitalisation to boost its profit, said its chief executive.
“We are ready to make the transformation to the next level,” Sohail RK Hussain, managing director and chief executive officer of Meghna Bank, told Dhaka Tribune in an interview last week.
For Meghna, the shift will be easier.
“This is because most of the big banks have already invested in physical infrastructure. But as a medium-sized bank, Meghna did not invest much on this front. So this a big scope for us to invest in digital infrastructure.”
All types of digital banking will be available in the bank from next year.
The bank also will expand its sub-branches banking, agent banking and internet banking in the next year as part of its robust business plan for the post-pandemic period, said Hussain, who joined Meghna on April 22.
Meghna will launch an integrated strategy that will prove its clients more options than what the other banks offer, said Hussain, who has more than 30 years of experience in this field.
All this would be smooth sailing for the seven-year-old bank.
“Meghna Bank has no legacy problem. Our default loan situation is quite transparent and we have an extremely strong capital adequacy ratio (CAR),” he said, adding that the bank’s default loan ratio is about 7.8 per cent.
The bank’s CAR, which is a measurement of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures, is 19-20 per cent, according to Hussain.
The industry’s CAR is about 11.9 per cent.
But the bank’s sponsors have decided to inject another Tk 200 crore next year to better tackle the COVID and post-COVID challenges and for smooth implementation of the stimulus funds.
“I am very happy about the tremendous initiative that has been taken by our board of directors and it will keep the confidence of our depositors as well as our correspondent banks.”
The bank’s balance sheet will improve because of the new capital injection.
To cope with the ongoing economic hardship brought on by the pandemic, the bank is emphasising on reducing operational costs like administrative cost, entertainment, office rent and other excesses.
The bank has reduced its cost of funds by cutting the rate of deposits in line with the sector, Hussain said, adding that it would create some challenges in the upcoming days.
“Private savings may fall owing to the lower deposit rate but we are trying to develop our products for customers so that they can get some benefits.”
Talking about the implementation of stimulus funds, he said the disbursement to the cottage, micro, small and medium enterprises sector is slower than disbursement to the large industry and services sector as the bank is assessing the clients properly.
“If they cannot repay the loans, the banks will have to take responsibility. We are assessing whether the clients will be able to sustain by overcoming the previous revenue loss.”
Even in normal times, loan disbursement to the SME entrepreneurs takes more time.
The stimulus funds announced by the government are very useful but the effects of the pandemic would not dissipate so soon.
“So the government, as well as the central bank, should take a series of follow up programmes like stimulus, tax rebate, monetary policy for businesses and the poor.”
As many as 60 per cent of the businesses have bounced back from the impact of the two-and-a-half-month-long shutdown to flatten the curve on coronavirus but they are not repaying the bank loans as the Bangladesh Bank has offered them loan moratorium facility until the end of this year.
“We are very concerned about the issue.”
Previously, Hussain played an instrumental role in transforming two private banks -- Eastern and City --from a branch-centric model to a business matrix and centralised model.
“This has proven to be very effective,” said the banker, who has an MBA degree from the prestigious Institute of Business Administration.
Hussain has hopes of having the same effect at Meghna.
“Once upon a time, City was a problem bank but now it is a leading private bank owing to the robust business transformation during my tenure. I also want to take Meghna to a new level.”