Dhaka Bank sets sights on digital push, NPA reduction

Dhaka Bank PLC seeks to solidify its position within the country's banking sector by prioritising digital transformation and loan recovery efforts to bring down non-performing assets (NPAs).
This vision steers the second-generation commercial bank towards increased focus on micro-banking operations, while adopting a cautious approach when evaluating new corporate loan proposals.
Concurrently, the bank is committed to continuous innovation by leveraging digital tools to make operations more effective and efficient and empower its customers further.
Dhaka Bank Chairman Abdul Hai Sarker talked about these current and future plans in an exclusive interview with The Financial Express on the occasion of the bank's 29th founding anniversary to be celebrated today (Friday).
He said the bank wants to give more focus on micro-level banking, noting the higher risk of non-performing loans (NPLs) associated with corporate financing.
"But, our commitment to supporting suitable corporate entities remains strong," clarified the chairman of Dhaka Bank, which commenced operations in Bangladesh in 1995.
Through various initiatives, the commercial bank managed to reduce its NPL ratio from 5.08 per cent in 2022 to 4.88 per cent in 2023.
Discussing the bank's methods for identifying good and bad borrowers, Mr Sarker mentioned their 29 years of experience serving the people. This extensive track record, he said, allows them to effectively distinguish creditworthy clients.
"We distance ourselves from borrowers deemed high-risk and implement a rigorous evaluation process before approving new corporate loans," he commented.
The bank chairman elaborated on their thorough screening process, which includes a comprehensive check of the client's social standing, financial health, business continuity through successors and other relevant factors.
Despite stringent loan approval procedures, he admitted that some defaults may occur. To this regard, Mr Sarker suggested that the government strengthen its monitoring of the judicial system to speed up the resolution of loan-related cases.
About NPL-containing procedures, Mr Sarker said the bank cannot alone tackle the NPL buildup unless the government strengthens the judicial system to expedite the resolution of loan-related disputes.
Mr Sarker cites instances of loan defaulter groups who abscond the country, leaving mortgaged properties behind. When the bank attempts to seize these assets, the defaulters employ lawyers from abroad to file injunctions, stalling the process.
"Why should the government allow fugitives to appoint legal representation?" Mr Sarker questioned. "To contest a case, physical presence should be mandatory."
Mr Sarker, who is also a reputed industrialist in the country, aired concerns regarding the Artha Rin Adalat (special courts for loan recovery). Judges' occasional absences for extended periods worsen the backlog of cases.
"The court should operate daily," Mr Sarker said. "In cases of judge absence due to illness, a swift replacement -- within two or three days -- should occur, not months."
He acknowledged Dhaka Bank's journey since its 1995 inception has not been without challenges, as he described it as a "bumpy path" that continues.
"But, we possess the necessary skills to navigate these obstacles," he added.
He identified two key strengths: a dedicated board with a strong business legacy and a commitment to sound corporate practices. These elements, he believes, will propel the bank towards its goals.
The board comprises prominent business leaders known for their ethical practices. They share a dedication to the country's socio-economic development, Mr Sarker said.
"Our ambition is to become a leader across all banking metrics by upholding the highest corporate governance standards," he added.
On digital transformation, he said it will require huge investment to build a robust digital infrastructure. The bank is committed to this investment to ensure its services cater to the tech-savvy younger generation.
"We are gradually transitioning from traditional banking to digital services," he commented. "This transformation is a must for survival in today's highly digital age."
Dhaka Bank Limited serves a large customer base of individuals and institutions through a network of 116 branches and 31 sub-branches nationwide.
Until June 2024, the bank's deposit portfolio stood at Tk 291.19 billion, while its loans and advances portfolio reached Tk 262.87 billion.
In 2023, the bank achieved an operating profit (before provision and tax) of Tk 8.15 billion, registering a Tk 1.25 billion increase from 2022's figure of Tk 6.90 billion.

[email protected]