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‘Demand for loans from the businesspeople has recently declined amid dull business situation’

eximMohammed Haider Ali Miah, managing director and chief executive officer of EXIM Bank, told New Age in a recent interview that the current political unrest put an upsetting impact on the country’s banking sector. Interviewed by AKM Zamir Uddin

New Age: What is the present condition of the country’s banking sector?
Mohammed Haider Ali Miah: The country’s banking sector is going through a tough time at the moment as business activities in the scheduled banks have dropped this year due to political unrest. Profitability of the scheduled banks depends on the private sector. Banks now find it difficult to give loans to entrepreneurs as they (entrepreneurs) are unwilling to go for fresh investment in the current political situation. Exporters are counting losses as the shipments of their products are being hampered because of the frequent strike and blockade enforced by the political parties. The authorities concerned should take immediate steps to solve the shipment problem.
Amid the political unrest, a number of banks have failed to recover loans from clients as businesses of the clients are not running well.
NA: What is your opinion about the recent trend in the country’s macro-economic situation?
Haider: The country’s trade deficit narrowed in the last few months and the country enjoyed a surplus current account balance in the period due to higher export earnings against lower import payment. However, the industrial sector will fall in a difficult situation in the coming months if the import of capital machinery and industrial raw materials do not increase. The foreign exchange reserve is now hovering at $17 billion, which also plays a significant role in strengthening the economy. But the reserve should be used in the investment sector. So, the government should take initiatives to use the forex reserve in the industrial sector, creating new entrepreneurs.
NA: What is the liquidity situation in your bank?
Haider: My bank is now holding huge amount of deposits as the demand for loans from the businesspeople has recently declined amid dull business situation. The businesspeople have adopted a ‘wait and see approach’ due to the political violence in the run up to the next general elections. For this reason, profitability in the banking sector may drop this year. Under the circumstances, we are trying to create new entrepreneurs in small and medium enterprises so that our credit disbursement will rise. Besides, my bank has put emphasis on increasing farm loan to strengthen the rural economy.
NA: What are the main reasons for the increase in financial scams in the banking sector in recent times?
Haider: Financial scams in the banking sector have recently increased due to lack of foresights of the bankers. Many bankers disbursed and sanctioned significant amount of loans without proper scrutiny, which pushed up defaulted loans. Besides, lack of ethics on the part of bankers also made the financial embezzlement possible and it was unexpected. The Bangladesh Bank has recently issued a number of guidelines and circulars to check scams in the banking sector. The BB has also introduced a Dashboard to monitor the foreign exchange-related transactions in the sector. Due to the central bank’s initiatives, irregularities and anomalies in the banking sector will decline in the days to come.
NA: Why the defaulted loans at EXIM Bank crossed Tk 1,000 crore in the last quarter (July-September)?
Haider: The defaulted loans in my bank increased significantly in the last quarter due to the political unrest. A number of clients of my bank failed to repay their loan instalments in due time, as they faced problems because of the existing unfavourable business environment. But, we have recently recovered significant amount of defaulted loans. So, the non-performing loans in the bank will decline in the last quarter (October-December) of this year.
NA: What is the focus of EXIM Bank in expanding its business operation?
Haider: We are now trying to expand our business operation in the rural areas. As part of the move, this year we have set up all (except one) of our new branches in the rural areas. One branch has been set up in the urban area this year. We have already introduced internet and mobile banking to attract more clients. EXIM Bank has opened four outlets aboard so that the inflow of remittances increases in the coming months. Moreover, we will sanction loans against the companies which will conduct their ratings by the international credit rating agencies, so that our risk-weighted assets will decline.


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