Dhaka Bank focuses on SMEs, retails for growth

Dhaka Bank Ltd has big plans for small and medium enterprises and retail clients as it looks to cement its position by reaching out to the under-served segments digitally, said its chairman Abdul Hai Sarker.

Since its inception in 1995, the bank has relentlessly put in efforts to speed up industrialisation in Bangladesh, playing an active role in the country's stellar economic growth.

The lender, which celebrates its 27th founding anniversary today, has set a target to create entrepreneurs across the country by disbursing SME loans with a view to ensuring inclusive growth.

"We not only disburse loans among small and medium enterprises. We also educate them on how to do banking efficiently," says Abdul Hai Sarker, chairman of Dhaka Bank

"We not only disburse loans among small and medium enterprises. We also educate them on how to do banking efficiently," said Sarker in an interview with The Daily Star recently.

As of December, SME clients accounted for 12.01 per cent of Dhaka Bank's total outstanding loans of Tk 21,415 crore.

It has set a goal to more than double the SME lending to 25 per cent by the fiscal year of 2024-25.

"We are placing our highest concentration in SMEs as the number of corporate clients is limited," Sarker said.

Already, the bank disburses loans among small businesses at the district level.

The bank is widening its operation in the retail banking segment by rolling out several digital deposit and loan products and services.

For example, clients can open bank accounts sitting at home using the mobile-based application of Dhaka Bank.

Thanks to the instant national identification card verification process put in place by the central bank, customers can obtain their bank account number instantly.

"We have also taken the initiative to disburse retail loans among the customers who maintain salary accounts with us," said Sarker, who completed post-graduation from the University of Dhaka in 1970.

Each applicant will be able to borrow Tk 25,000 within two hours after they submit the application through the digital platform.

The bank has initiated a pilot programme to implement the digital loan product, said Sarker, a former president of the Bangladesh Textile Mills Association.

Dhaka Bank has 60,000 clients who maintain payroll accounts with the bank.

According to the entrepreneur, many clients now prefer to carry out banking transactions without visiting branches. So, the digital products of the bank will help them enjoy banking services without any hassles.

The lender is now focusing on beefing up its cybersecurity to keep hackers at bay.

The private commercial bank has strengthened its green banking programme to address the ongoing climate change and help Bangladesh fight against global warming.

"We encourage environment-friendly businesses to borrow from our bank," said Sarker.

Dhaka Bank is one of the top lenders in the foreign exchange trade segment.

The ratio of non-performing loans in the bank stood at 3.32 per cent in December, way lower than the industry average of 7.93 per cent.

"This reflects our strong corporate governance practices. We have never compromised on corporate governance," said Sarker, who established Purbani Group in 1973.

"Delinquent borrowers frequently show their dissatisfaction after failing to manage loans from us."

Sarker takes pride in the fact that the board does not intervene in the day-to-day running of the bank, which has paved the way for Dhaka Bank to strengthen its position in the market.

Over the years, the bank won the heart of depositors thanks to sound corporate governance.

Deposits stood at Tk 23,041 crore last year, up 12 per cent year-on-year.

"We strongly believe that loans should be disbursed complying with banking rules as the funds belong to depositors," Sarker said.

He describes customers as the main strength of Dhaka Bank, saying they play a major role in strengthening its financial health.

But the situation was completely different when Sarker and others planned to set up a bank in the 1980s, the industrialist recalled.

"The public faced lots of trouble and had to spend hours in queues at branches while securing banking services at that time," said Sarker.

The disappointing customer service prompted him to come up with the idea of establishing Dhaka Bank. He was the founder chairman of the bank.

Sarker also touched upon some issues confronting the financial sector.

He termed right the central bank's decision to discourage the imports of non-essential items to tackle the ongoing foreign exchange pressure in the banking sector.

He suggested the central bank make the lending rate cap flexible and follow a floating exchange rate.

"The economy is strong enough to maintain a flexible lending rate. We should follow the free-market economy in line with global standards," Sarker added.