Sonali Bank should improve client services, cut NPL

Speakers opine at its annual conf'ce

FE Report | Published: March 04, 2020 23:08:36

The state-run Sonali Bank Limited (SBL) should improve quality of its customer services to tackle challenges ahead, as lending rate will be the same (9.0 per cent) for all banks, speakers said at a programme on Wednesday.
They also said for higher profitability, the bank needs to rein in its non-performing loans (NPL) as well as adapt new financial technologies to lessen operational cost.
The suggestions came at the annual conference of SBL, held at Bangabandhu International Conference Centre (BICC) in the capital.
Finance Minister A H M Mustafa Kamal addressed the programme as the chief guest.
The Bangladesh Bank (BB) Governor Fazle Kabir, SBL Chairman Ziaul Hasan Siddiqui, and Financial Institution Division Secretary Md Asadul Islam also spoke at the conference, with SBL managing director and CEO Md Ataur Rahman Prodhan in chair.
The minister in his speech said the bank should prioritise youths in its banking activities through offering better services, as they will be key driver of the country's growth in near future.
He opined that SBL should take initiatives to bring more people into mainstream economic activities in line with the vision of Bangabandhu to make the country free of hunger and poverty.
More innovative banking solutions should be developed to take forward the people, who fall behind from overall development, Mr Kamal added.
The BB governor said SBL's NPL came down to 21.55 per cent in 2019 from over 30 per cent in 2018. But the bank needs to reduce it to single digit.
"As of December 31, gross NPL in the country's banking sector stood at 9.32 per cent. Besides, net NPL was less than 2.0 per cent, which is not that abnormal in comparison to (that of other countries of) the region."
Out of total Tk 11 trillion loans and advances in the country, the amount of NPL is 0.94 trillion, he further said.
Noting that the bankers have become extra cautious in sanctioning loans after the Hallmark scam,
Mr Kabir said, "Bankers must approve loans without fear. If they perform with due diligence, they have nothing to worry about."
Although the country's export earning was recently hit, its balance of payment is quite good due to rise in inward remittance flow following announcement of 2.0 per cent incentive, he added.
Speaking on the occasion, the SBL chairman said the recent Coronavirus outbreak has been affecting global economy, and Bangladesh is no exception.
"Decreased export-import activities in the country means lower opening of letters of credit (LCs) in the banks, which will ultimately result in their declined earnings."
SBL is offering loans at 9.0 per cent rate. But, the bank will face challenge this year. It will have to compete with other banks, as the 9.0 per cent lending rate will come into force for all banks from April 01, Mr Siddiqui opined.
"Quality service delivery will be the most effective tool to overcome the challenge, while increased use of technology may cut operational cost."
The SBL chairman also informed that the state-run bank will launch an app for its customers on March 17, so that they can pay bills, transfer funds, and check balance online.
The bank will also commence agent banking operations soon to further reach unbanked population, he added.
The SBL CEO said, "We want to take our service quality to the highest level to bring down the amount of classified loans."
SBL has registered the highest operating profit (Tk 17.30 billion) among the state-owned banks and second among all banks in the country in 2019.
Indicating to criticisms the bank faces from time to time, Mr Prodhan said the bank provides 37 services, out of total 52, for free and without any commission.
For example, SBL incurred Tk 15 billion loss last year due to opening the government's LCs, as the bank buys US dollar at government rate and makes payments as per international rate, he added.
SBL is the largest commercial bank in Bangladesh with a network of 1,224 branches throughout the country.
The amount of its deposit increased by Tk 63.79 billion and reached Tk 1.15 trillion in 2019 from Tk 1.09 trillion in 2018.
In the meantime, SBL's loans and advances increased by Tk 86.56 billion to reach Tk 550.64 billion from Tk 464.08 billion.
Classified loans of the bank decreased by Tk 16.21 billion to stand at Tk 105.67 billion in 2019 from Tk 121.88 billion in 2018.
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