Dhaka Bank focuses on SMEs and retail for growth
Dhaka Bank Ltd has big plans for small and medium-sized businesses and retail customers as it seeks to cement its position by reaching underserved segments digitally, its chairman Abdul Hai Sarker said.
Since its inception in 1995, the bank has made relentless efforts to accelerate industrialization in Bangladesh, playing an active role in the country’s rapid economic growth.
The lender, which is celebrating its 27th anniversary today, has set itself the goal of creating entrepreneurs across the country by providing loans to SMEs with a view to ensuring inclusive growth.
“We don’t just disburse loans to small and medium enterprises. We also educate them on how to bank efficiently,” says Abdul Hai Sarker, Chairman of Dhaka Bank.
“We don’t just disburse loans to small and medium-sized businesses. We also educate them on how to bank effectively,” Sarker recently said in an interview with The Daily Star.
As of December, SME customers accounted for 12.01% of Dhaka Bank’s total outstanding loans, or Tk 21,415 crore.
It has set a goal of more than doubling SME lending to 25% by fiscal year 2024-25.
“We place our strongest focus on SMEs because the number of corporate clients is limited,” Sarker said.
Already, the bank is providing loans to small businesses at the district level.
The bank is expanding its business in the retail banking segment by rolling out several digital deposit and lending products and services.
For example, customers can open bank accounts sitting at home using Dhaka Bank’s mobile app.
Thanks to the instant national ID verification process implemented by the central bank, customers can get their bank account number instantly.
“We have also taken the initiative to disburse loans to individuals among customers who hold salary accounts with us,” said Sarker, who completed his graduate studies at the University of Dhaka in 1970.
Each applicant will be able to borrow 25,000 Tk within two hours of submitting the application through the digital platform.
The bank has launched a pilot program to implement the digital loan product, said Sarker, former chairman of the Bangladesh Textile Mills Association.
Dhaka Bank has 60,000 customers who maintain payroll accounts with the bank.
According to the entrepreneur, many customers now prefer to carry out banking transactions without going to a branch. So, the bank’s digital products will help them enjoy hassle-free banking.
The lender is now focusing on strengthening its cybersecurity to keep hackers at bay.
The private commercial bank has boosted its green banking program to address ongoing climate change and help Bangladesh fight global warming.
“We encourage environmentally friendly businesses to borrow from our bank,” Sarker said.
Dhaka Bank is one of the leading lenders in the currency trading segment.
The bank’s non-performing loan ratio stood at 3.32% in December, well below the industry average of 7.93%.
“It reflects our strong corporate governance practices. We have never compromised on corporate governance,” said Sarker, who founded the Purbani Group in 1973.
“Overdue borrowers frequently show their displeasure after failing to service loans from us.”
Sarker prides himself on the fact that the board does not interfere in the day-to-day management of the bank, which has paved the way for Dhaka Bank to strengthen its position in the market.
Over the years, the bank has won the hearts of depositors through sound corporate governance.
Deposits stood at Tk 23,041 crore last year, up 12% year-on-year.
“We strongly believe that loans should be disbursed according to banking rules because the funds belong to the 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 were considering setting up a bank in the 1980s, the industrialist recalls.
“The public encountered a lot of problems and had to spend hours in queues at branches while securing banking services at the time,” Sarker said.
Disappointing customer service prompted him to come up with the idea of establishing Dhaka Bank. He was the founding president of the bank.
Sarker also touched on some issues facing the financial sector.
He described as fair the central bank’s decision to discourage imports of non-essential items to cope with continued currency pressure in the banking sector.
He suggested that 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.