Financial inclusion has a long way to go

A large part of Bangladeshi population still remains outside the purview of banking services. Financial inclusion has a long way to go. Equally important is the need for extensive improvement through the application of the latest fintech, Dr Zaid Bakht, Chairman of Agrani Bank Limited, told The Business Post’s Rezaul Haque in an exclusive interview

Would you please tell us how far the initiatives like stimulus package and other moves taken by the government will effectively work in mitigating the adverse economic impact caused by the Covid-19 pandemic?

In my opinion, government intervention helped the economy to a significant extent to absorb the adverse economic impact caused by the Covid-19 pandemic. We have noticed that despite some slowing down, GDP growths during FY20 and FY21 have been respectable.

Export growth had somewhat slackened initially but with proper government support the sector has succeeded in bouncing back and even overshooting targets. The remittance situation has been much more spectacular with more than 30 per cent growth in FY21.

Do you think that innovation and further modernisation can be brought into the service quality of public banks?

State owned commercial banks (SOCBs) are far behind their private sector counterparts in terms of fintech which results in low customer satisfaction. The SOCBs are aware of it and are in the process of upgrading their service quality through modernisation and automation.

The need for modernisation and automation was even more keenly felt during the Covid-19 crisis due to limited online services provided by these banks. In my opinion, the upgradation process can be expedited with active support from Bangladesh Bank and the Ministry of Finance.

We know that banks are the lifeblood of the economy, so how would you evaluate the role of banks in boosting economic growth?

The spectacular growth performance of Bangladesh’s economy has been possible due to investments undertaken both by the public and the private sector. The financing of these investments in turn has been possible due to the support provided by the banks.

It is well known that a significant part of the budget deficit is financed out of bank borrowing. Also, in the absence of a well-developed capital market and specialised investment financing institutions, banks became the only option for debt financing of private investments.

Would you tell us about the shortcomings and failures of banks?

A large part of Bangladeshi population still remains outside the purview of banking services. Financial inclusion has a long way to go. Equally important is the need for extensive improvement through the application of the latest fintech.

The banking sector also needs to be more closely integrated with the government’s development planning. A prerequisite for that to happen is to keep the sector free from the influence of vested interest groups.

How would you evaluate the role of Agrani Bank in the country’s industrialisation and growth?

Amongst the SOCBs, Agrani Bank ranked 3rd in terms of most of the performance indicators up until 2015. But now Agrani tops the group in terms of some major indicators and second with regard to the others.

Some of the important achievements of Agrani Bank include (i) Highest remittance earned amongst SOCBs and second highest amongst all banks, (ii) highest import and export financing amongst all SOCBs, (iii) Agrani single-handedly met the entire $1.2 billion foreign exchange need of Padma bridge construction from its own source of foreign exchange earnings through remittance and export financing, (iv) Only SOCB with offshore banking facility, (v) pioneer amongst the SOCBs in terms of initiating agent banking, (vi) lauded by Bangladesh bank for Green Financing, and (vii) only bank overfulfilling the disbursement target of stimulus fund to the CMSME sector.

What about research and analysis in the banking sector?

Except for the foreign banks, there is very little research and analysis that is being carried out by the banking sector in Bangladesh. The SOCBs also lag behind in this respect. We see a similar situation in the case of business associations and chambers.

There is a need for a change in the outlook concerning the formulation of business strategy based on empirical evidence.

There is also a shortage of skilled manpower to carry out relevant research and analysis. So, my reckoning is that this lacuna is going to continue for some time.