The New Nation - Internet Edition

Staff Reporter

Finance Adviser Dr AB Mirza Azizul Islam yesterday asked the National Commercial Banks (NCB's) to mobilise their savings from rural areas for making the banks as a profitable one.

He was addressing a seminar on "Steps towards making Janata Bank (JB) the effective largest bank in Bangladesh" as chief guest, was held at Bangladesh-China Friendship Conference Centre at Sher-e-Bangla Nagar in the city. The Janata Bank Limited (JBL) organised the seminar on the occasion of its mid-year business conference. Chairman of the Board of JB Suhel Ahmed Chowdhury presided over the seminar.

"The NCB's should mobilise savings from the rural areas. For this reason, they should pay more attention for agriculture sector," Finance Adviser Azizul Islam said.

The banks should also give attention to reduce disparity between the regions when they were lending their resources, he also said.

He called upon the NCB's to establish the relationship between the stakeholders and directors of board of the banks for properly mobilise their resources.

He said that the Government run commercial banks have faced stiff competition with private commercial banks now.

"So, the NCB's have to look at risk assets properly. It should uphold its brand name by proper monitoring of the overall activities of banks," Aziz said.

"The Government has taken initiative to lunch a complete organ gram and service rules as early as possible for NCB's to run its activities smoothly," he informed.

"The JBL should be a profitable organisation. But, profit is not the single objectives. The bank must provide loan in the productive sectors," the Finance Adviser said.

Finance Division Secretary Dr Mohammad Tareque said that the NCB's should reduce internal expenditure for making the bank profitable one.

"For this reason, the banks should introduce new products to make ensuring its profit through dynamic leadership," he said.

He added that the banks should appoint young, dynamic and talented manpower who are educated on technology.

"If the banks can ensure to provide best service, the profit will increase gradually," he hoped.

National Board of Revenue Chairman Muhammed Abdul Mazid said that the activities of NCB's will be mass oriented and public interest related.

"The overseas banking profit of the NCB's have reduced significantly. It should need to take a realistic plan to revive the revenue from overseas banking of the banks," Mazid said.

Bangladesh Krishi Bank Chairman Khondaker Ibrahim Khaled called upon the Government to appoint the Chief Executive Officer, boards of directors who have social acceptability and efficient beyond any doubt for the national commercial banks.

"If the government should ensure proper appointment, the NCB's must be profitable," he said.

Prof Dr Mahmood Osman Imam, Chairman of Department of Finance of Dhaka University said that the authority should offload ownership of NCB's to different stakeholders to make the banks profitable.

BIBM Director and Professor Dr Taufic Ahmed Chowdhury presented the keynote paper in the seminar. He said at his keynote paper, "If the measures including formulation of a re-capitalisation plan, limiting the growth (up to 5 per cent) of outstanding loans and advances, reduction of classified loan, improving cash recovery from top 20 defaulters and other defaulters, reduction of operating expenses in 2008 by 5 per cent, maintaining cost of deposits at present level, strengthening of internal audit and control, formulation of a comprehensive HR policy, full implementation of Care Risk Management guidelines, submission of Long Term Management Plan will be implemented successfully, it will be able to turnaround JBL to a sound bank from its status of a weak bank."

Rough estimates of some informed sources indicate that on an average the banks in Bangladesh are going to face around 20 per cent increase in minimum capital requirement from the present level, because of considering market risk and operational risk, in addition to credit risk, he added.

"The JBL Board of Directors and management should be a bit aggressive in terms of raising new capital by issuing IPO (of course of premium) and non-cumulative perpetual preferred stock (NCPPS). In India, many NCSs have almost 50:50 share between common stock and NCPPS," he informed.

"Decrease of banking cost is another priority area for rebuilding a weak bank. However, the reduction of operating cost should not be considered in absolute sense. If increase in revenue can outweigh substantially increase of operating cost, that would be more meaningful for the bank's viability, Prof Taufic said at his paper.

"Branches may also be segmented on the basis of corporate, commercial, retail, etc. to meet the needs of various target markets. The JBL's subsequent customer focus, product development, computerisation, reorganising the branch and mid tier network-should be all depending on main business focus of the bank. For implementing a comprehensive human resources (HR) policy dedicated and professional HR people must recrute the HR department, which again would be allowed to work independently, he pointed out.