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‘If the businesspeople do not borrow money from banks, it will be very difficult for us to keep the promise we have made to our depositors’

Muhammed Ali, Managing Director of United Commercial Bank

Muhammed Ali, Managing Director of United Commercial Bank

Muhammed Ali, managing director of United Commercial Bank Ltd, , in a recent interview with New Age, has said banks are going through a tough time due to the current political violence, frequent hartals and blockades. Interviewed by Ahmed Shawki.

New Age: What is the present situation of the country’s banking sector?
Muhammed Ali: The present situation of the banking sector is gloomy. Country’s economy is suffering because of the current political uncertainty and violence. Investment as well as business expansion by entrepreneurs has dropped. The unfavourable business condition has posed a serious problem to banks.
We collect deposits from people with assurance of higher returns. If the businesspeople do not borrow money from banks, it will be very difficult for us to keep the promise we have made to our depositors.

NA: What is the main reason for the stagnancy?
Ali: The key reason for the stagnancy is the ongoing political unrest surrounding the next national elections. The political parties are not willing to compromise their ground which has resulted in a deadlock. The situation has led to violence, frequent strikes and blockades which are hampering the business environment and economic activities seriously. But, we hope that the situation is temporary. If the situation do not linger, everything will return to normalcy, perhaps, within few months. As the economic activities have slowed down, unemployment is rising. The unemployed workforce is also getting involved in illegal activities because of frustration.

NA: What problems are banks facing?
Ali: The main problem is that borrowers find it difficult to return loans to banks. They took the money for business purpose and as the business activities are seriously affected by the political unrest they could not return their loans. So, banks are not getting projected amount of loans returned which is creating many operational hazards and the businessmen are not willing to take fresh loans. The cumulative effect of the two aspects put the banks in a very tight spot.

NA: How are banks planning to do to overcome the problem?
Ali: We hope and believe that the situation is temporary. For now, my bank is focusing on non-traditional banking. We are focusing on the rural market with various new products which will be helpful for them. The central bank has introduced a vision of financial inclusion to bring the unbanked people in the mainstream of the economy. We are now also concentrating on the BB vision.

NA: What do you think about the Bangladesh Bank’s loan classification rules?
Ali: I think the central bank has its own way to see things and it has research. Whenever it comes up with any new rule or regulation, there is surely some ground for that. At the same time I need to say that the latest loan classification rules are hard for us to comply with and the BB should relax the rules a bit.

NA: What do you think about the overall business environment in the country, keeping aside the present political situation?
Ali: Our country is growing fast and has the capacity to go even faster. We have the demographic dividend that most of out population are workable population. To make sure the use of the workforce we need to address some core infrastructural issues. Power in our country is very costly and industries face its shortage, our communication system needs massive reconstruction. We see our basic strength is garment export and the remittance. We have to facilitate these two sectors on priority basis. Garment owners and the government should ensure proper business environment in the factories including workers safety. At the same time the remittance earners also need extra care so that they can get skill development training and safe working condition abroad.

http://www.newagebd.com/detail.php?date=2013-12-15&nid=76821#.Uq02MfQW3HA

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