Mosleh Uddin Ahmed NCC Bank has planned to expedite deposit mobilisation particularly core or retail one aiming to improve financial health further through reducing its cost of fund, the bank's top executive has said.
"In the present scenario it is very difficult to sustain by taking deposits at 7.5 per cent -8.5 per cent. As such we have no other option but to reduce deposit cost as well as operating cost. As such we've given low cost deposit collection target to each employee to bring down the cost for fund by at least 1.0 per cent from the existing level within a soonest possible time," Mosleh Uddin Ahmed, Managing Director and Chief Executive Officer (CEO) of the National Credit and Commerce (NCC) Bank Limited, told the FE in an exclusive interview recently ahead of the bank's 27th anniversary.
The leading private commercial bank (PCB)'s latest move came against the backdrop of rising trend in the cost of fund despite higher growth of its deposits.
The cost of fund rose to 8.78 per cent in 2019 from 8.66 per cent a year before. It was 7.83 per cent in the year of 2017.
The deposit of the NCC Bank grew by more than 77 per cent to Tk 200.02 billion in 2019 from Tk 112.72 billion in 2015. It was Tk 191.34 billion in 2018.
"The main objective of single-digit interest rate will not be achieved if the availability of deposits are not ensured at 6.0 per cent," Mr. Ahmed said while explaining the latest interest rate situation of the country's banking system.
Country's commercial banks have implemented 9.0 per cent interest rate on all loans except credit cards in line with the Bangladesh Bank (BB)'s directive.
Earlier on February 24, the central bank instructed all the scheduled banks to fix a maximum 9.0 per cent interest rate on all loans except credit cards as part of the government initiative of bringing down the rate to single digit from April 01.
The profitability of banks has already dropped drastically in April from the previous month after implementation of the 9.0 per cent interest rate on all loans except credit cards, according to the CEO.
The senior banker has expressed his concern over imposing restriction on transferring the interest income for the two months to the interest-free block account by the central bank, saying that it will hamper cash-flow of the banks in the near future.
"Such restriction will also create extra pressure on the bank's profitability as well as balance sheet management if the next decision on the issue will not be taken properly," Mr. Ahmed explained.
The banks are not allowed to transfer the interest in the blocked account of the borrowers to lenders' income book until further notice, issued by the BB.
"Foreign trade will be costlier if the financial health of banks becomes weak due to the lack of proper policy supports by the regulators," the CEO noted.
On the other hand, profits of the banks are a major source of income tax of the National Board of Revenue (NBR), according to the CEO.
"As such, the aggregate profits of the banks have an impact on the revenue collection in the form of direct taxes collected by the revenue board," Mr. Ahmed explained.
He also said the banking sector is working like heart of the economy. "All the stakeholders should consider bank's deposit is public money to handle with prudently."
The private banker also urged the central bank as well as the government for providing a policy support to the banks immediately for improving financial health of the country's banking system.
The NCC Bank is working to expand the scope of customers' services further using modern technologies with a view to turning the bank into a global standard one in the next three years.
"We're committed to provide automated services through installing latest technologies for ensuring quality services to our valued clients," Engineer-turned banker Mr. Ahmed said while replying to a query.
As part of the automation plan, the bank will set up initially 100 modern ATM (automated teller machine) in different locations across the country with recycler i.e. money depositing facility.
Currently, the NCC Bank is providing services to the clients through 125 ATM booths across the country.
The NCC Bank takes the privilege of serving the nation as a progressive and socially responsible financial institution by bringing credit and commerce together for increased shareholders value with ensuring sustainable growth since its inspection on, according to the CEO.
"We've also planned to set up an own platform to resume mobile financial services aiming to bring more un-banked people into the banking network," Mr. Ahmed said while replying to another query.
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