Private banks can do much for the nation
Saturday, 23 April 2011
Dr. Md. Azadur Rahman Khan
With the increase in population, and in line with the needs and demands of the people, the service sector has been increasing rapidly. Service sector is increasing in a many and diversified ways not only in Bangladesh but also throughout the world. In USA service sector occupies more than 50 per cent of all sectors. The flow has also been in Bangladesh for the last few decades. Banking sector occupies a prominent position among the service sectors in Bangladesh. After the liberation there were only state-owned banks in Bangladesh which could hardly render quality service of the growing demand of the people. With the view of providing quality service, the private banks have been emerged at the end of the '80s. Many people are gathering at the private banks with many emerging problems. And they are getting hassle-free solutions with quality service. The Financial Express on its April 09, 2011 issue published the comment of Food & Disaster Management Minister Dr Abdur Razzaque on the role of state owned banks in the development of the country by observing and justifying only a few points such as investment in rural areas, interest rate and earning low profit. The minister's comment was, however, contradicted by Mr. Neaz Ahmed, Managing Director of the National Bank Limited in his article captioned "Too uncharitable a comment on operation of private banks" that also appeared on the 18 April 2011 issue of the Financial Express. In the opinion of Mr. Neaz Morshed, what the minister actually uttered is a hypothesis of research but not a tested one that "private banks are exploiting". A comparative analysis of the roles of state owned banks and private banks may be very much relevant in this regard. The state-owned banks collect mainly governmental fund, credit to the industry as well as rural areas and do some ancillary services like telephone bill, electricity bill, gas bill etc. State-owned banks generally carry out the set programs of the government. On the other hand, private banks collect both public and private deposits and do credit to industries including agriculture based industries. Private banks also do ancillary services like utility bills -- telephone bill, electricity bill, gas bill etc. For the transparency of the account the private banks send statement by post or by e-mail to the customers. So the common goals of both state owned and private banks are aimed at building the economy of Bangladesh. But it is needless to say, private banks are doing much more for the society than the state owned banks. The private banks are giving scholarships to the students, fund to the destitute and different charitable foundations, taking part in disaster problem by giving fund to the government, and sponsoring national events. In each case of penetration of new financial products like credit card and ATM, contract with Western Union, the private banks are forerunner than the state owned banks. There are many more instances. All of the activities are related to profit margin of the private banks. Competitiveness is an important factor throughout the world. If any institution fails to provide service at the existing system of other institutions of the same line, it will enter into the dropout list. So quality service has become the only criteria for the competitiveness of banking industry. By gaining more profit the private banks have the discretion to take part in the social activities enthusiastically for the upliftment of the society. Quality service is always high priced. While paying the price the customer takes into consideration if he is getting service at par existing price. As an instance private hospitals in the health sector are providing better services where more than 3000 heart operations have got 100 successes. State owned banks are big in size (market size) in the sense that they have more branches at the remote areas, but practically fails to meet the needs and demands of people to some extent due to rapidly changing environment of the country. This is more or less admitted by all as the customers of private banks are increasing dramatically. Banks in the USA have introduced more than 500 financial products keeping pace with the needs and demands of the people. Economics today is being broken into pieces like education economics, marriage economics, health economics etc. So private banks have introduced education loan, marriage loan, and healthcare loan even any purpose loan where the facility users have the right to conceal his motive to use the money. Some private bank have recently launched new financial products like School banking, Double Benefit Schemes covering death insurance, Monthly Income Scheme etc. keeping the need of the people of the targeted segment. Private commercial banks are creating jobs, providing quick service to foreign remittance earners, and investing more in export and import business. They can do much or will do more by shouldering the responsibility of nation building activities in future if government's policy towards private banks remains friendly and congenial. We hope that private banks will explore new venues step by step for the development of our country whatever comments it receives. The writer is an Assistant Vice President of the National Bank Ltd., and can be reached at E-mail: azad_dec@yahoo.com . Comments and views expressed in the article are of his own, and not of the organisation he is working with.
With the increase in population, and in line with the needs and demands of the people, the service sector has been increasing rapidly. Service sector is increasing in a many and diversified ways not only in Bangladesh but also throughout the world. In USA service sector occupies more than 50 per cent of all sectors. The flow has also been in Bangladesh for the last few decades. Banking sector occupies a prominent position among the service sectors in Bangladesh. After the liberation there were only state-owned banks in Bangladesh which could hardly render quality service of the growing demand of the people. With the view of providing quality service, the private banks have been emerged at the end of the '80s. Many people are gathering at the private banks with many emerging problems. And they are getting hassle-free solutions with quality service. The Financial Express on its April 09, 2011 issue published the comment of Food & Disaster Management Minister Dr Abdur Razzaque on the role of state owned banks in the development of the country by observing and justifying only a few points such as investment in rural areas, interest rate and earning low profit. The minister's comment was, however, contradicted by Mr. Neaz Ahmed, Managing Director of the National Bank Limited in his article captioned "Too uncharitable a comment on operation of private banks" that also appeared on the 18 April 2011 issue of the Financial Express. In the opinion of Mr. Neaz Morshed, what the minister actually uttered is a hypothesis of research but not a tested one that "private banks are exploiting". A comparative analysis of the roles of state owned banks and private banks may be very much relevant in this regard. The state-owned banks collect mainly governmental fund, credit to the industry as well as rural areas and do some ancillary services like telephone bill, electricity bill, gas bill etc. State-owned banks generally carry out the set programs of the government. On the other hand, private banks collect both public and private deposits and do credit to industries including agriculture based industries. Private banks also do ancillary services like utility bills -- telephone bill, electricity bill, gas bill etc. For the transparency of the account the private banks send statement by post or by e-mail to the customers. So the common goals of both state owned and private banks are aimed at building the economy of Bangladesh. But it is needless to say, private banks are doing much more for the society than the state owned banks. The private banks are giving scholarships to the students, fund to the destitute and different charitable foundations, taking part in disaster problem by giving fund to the government, and sponsoring national events. In each case of penetration of new financial products like credit card and ATM, contract with Western Union, the private banks are forerunner than the state owned banks. There are many more instances. All of the activities are related to profit margin of the private banks. Competitiveness is an important factor throughout the world. If any institution fails to provide service at the existing system of other institutions of the same line, it will enter into the dropout list. So quality service has become the only criteria for the competitiveness of banking industry. By gaining more profit the private banks have the discretion to take part in the social activities enthusiastically for the upliftment of the society. Quality service is always high priced. While paying the price the customer takes into consideration if he is getting service at par existing price. As an instance private hospitals in the health sector are providing better services where more than 3000 heart operations have got 100 successes. State owned banks are big in size (market size) in the sense that they have more branches at the remote areas, but practically fails to meet the needs and demands of people to some extent due to rapidly changing environment of the country. This is more or less admitted by all as the customers of private banks are increasing dramatically. Banks in the USA have introduced more than 500 financial products keeping pace with the needs and demands of the people. Economics today is being broken into pieces like education economics, marriage economics, health economics etc. So private banks have introduced education loan, marriage loan, and healthcare loan even any purpose loan where the facility users have the right to conceal his motive to use the money. Some private bank have recently launched new financial products like School banking, Double Benefit Schemes covering death insurance, Monthly Income Scheme etc. keeping the need of the people of the targeted segment. Private commercial banks are creating jobs, providing quick service to foreign remittance earners, and investing more in export and import business. They can do much or will do more by shouldering the responsibility of nation building activities in future if government's policy towards private banks remains friendly and congenial. We hope that private banks will explore new venues step by step for the development of our country whatever comments it receives. The writer is an Assistant Vice President of the National Bank Ltd., and can be reached at E-mail: azad_dec@yahoo.com . Comments and views expressed in the article are of his own, and not of the organisation he is working with.