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Bringing the unbanked to financial network

Abu Zafar Chowdhury | December 09, 2019 00:00:00

Around one-third of the Bangladesh people is still financially excluded due mainly to a lack of commercial banks' dedication to diversified services, collateral-based system for loan disbursement, low level of financial literacy, and information asymmetry.

The Dhaka Mercantile Co-operative Bank Limited (DMCB) believes a sustainable economic growth will not be possible without bringing the unbanked people into the formal financial network.

The DMCB, a cooperative society, started its journey in 1973 aiming to help improve socio-economic conditions of marginal, small and middle income groups. A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs through a jointly owned and democratically controlled enterprise.

The DMCB is designed to work for its members who are beneficiaries of its grand success. It is the largest co-operative bank in Bangladesh under the supervision of the government's Co-operative Department.

Reducing poverty, creating employment opportunities and improving of socio-economic condition through co-operative activities are prime motto of the financial institution.

Despite some global and national challenges, the DMCB has achieved impressive growth in business. Its aggregate deposit grew by nearly 30 per cent in the FY 2018-19, which was higher than that of the country's all scheduled banks' average deposit growth (11 per cent). The DMCB's deposit rose to Tk 52.49 billion in the last fiscal from Tk 17.05 billion in the previous year.

Higher deposit growth has helped the DMCB to bring down its deposit investment ratio at 85.48 per cent in the FY '19 from 88.37 per cent a year before.

Investment portfolio grew by 25.41 per cent to Tk 19.62 billion.

The DMCB emphasises boosting investment in cottage, micro, small and medium enterprises (CMSMEs) as a backbone of the economy. There is a rising trend in investments in CMSMEs sector and the growth was 25.41 per cent at the end of 2018-19. Micro investment rose 11.40 per cent in the year. The total investment in CMSMEs sector as on June 30, 2019 was Tk 19.62 billion out of which micro investment was Tk 13.24 billion.

The DMCB is trying to help boost investments in the CMSMEs that contribute to achieving sustainable economic growth with adequate employment opportunities. CMSMEs play a vital role in bringing more unbanked people to the formal financial network. The DMCB also focuses on empowerment of women particularly ones from rural areas as they have traditionally been excluded from membership of many co-operatives, despite making a contribution to enterprises.

The DMCB will continue its holistic efforts in accelerating its contribution to improving socio-economic conditions of the members of the society. It is now working to gear up its engagements in providing sustainable livelihoods, especially to the under privileged people.

The DMCB has introduced various investment schemes like education, marriage, home, agriculture and women entrepreneurs aiming to cover more unbanked people.

Meanwhile, the total value of assets of the DMCB increased by nearly 31 per cent to Tk 25.10 billion in the last fiscal year from Tk 19.22 billion in the FY '18 while net profit grew by nearly 12 per cent to Tk 188.50 million from Tk 168.50 million.

The DMCB uses specified risk tolerance mechanisms in diversifying the process of allocating capital. A common path towards diversification is to reduce risk or volatility by investing in a variety of assets.

The rationale behind this technique is that a portfolio constructed of different kinds of assets will, on average, yield higher long-term returns and lower the risk of any individual holding or security.

Success of any financial institutions depends on fund management properly. Accordingly, the DMCB extends its investment schemes to help create employment opportunities by developing entrepreneurship.

Besides, earning per share of the DMCB that stood at Tk 391 in the FY '19 from Tk 387 in the previous fiscal indicates healthy sign of the co-operative bank.

As part of expansion of businesses, the DMCB has expanded its operations through setting up 06 (six) new branches at different areas and total number of branches of the financial institution as on 30 June 2019 stood at 133.

While providing people with cutting-edge modern co-operative banking services, the DMCB also ensures compliances with the Shariah principles in all its operational activities.

The employees of the DMCB collect installments from the door step of the clients on daily, weekly and monthly basis. It has employed around 3,100 people.

The authorities of DMCB believe that effective management of health and safety, environment and human rights is essential to grow its business in a sustainable and responsible manner, where the management pays always high attention.

The DMCB has maintained compliance with existing rules, regulations and directives, given by the concerned authorities, and standard corporate governance practices.

Maximisation of profit is not the main objective of the DMCB; rather it works for establishing equitable justice in the financial system by prioritising need-based, productive and income generating investments.

The US-based World Confederation of Business (WORLDCOB) has selected the DMCB for BIZZ AWARD-2019, for its business leadership, quality service, innovation, management systems, good governance and corporate social responsibility initiative.

The DMCB was incorporated in 1973 as a co-operative bank but adopted Shariah-based co-operative banking in 2008 with a competent Shariah Supervisory Committee that has been progressing gradually and will enhance efforts to ensure equity and justice in all economic activities.

The DMCB has automated all its 133 branches and 03 (three) sub-branches using modern software aiming to provide faster and better services to its members. It has developed software with its own IT professionals' that was different from the others financial institution.

The DMCB is committed to doing better for its members, investors, employees and communities through a focused approach to corporate responsibility.

The DMCB is providing support to a number of charities in the community where its employees, members and stakeholders are living and working. Its CSR initiatives enhanced focus on education and cultural activities, emergency relief in humanitarian distress, sports arena, promotional activities and health, financial assistance to disabled staff and to family members of victims of accidental death among the staff.

The DMCB is encouraging people from all economic strata to become a member to contribute to building a poverty-free Bangladesh in future.


Group Captain (retd.) Abu Zafar Chowdhury is the Chairman of DMCB.


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