Mr M A Hashem joined the Board of International Leasing on February 9, 2015 as Nominated Director and elected as Chairman of the company on May 07, 2015.
M A Hashem is a senior banker of the country with over 35 years of career in the leading public commercial banks. In his long illustrious career, he held various important positions of different banks including the positions of managing director of Janata Bank Limited, deputy managing director of Sonali Bank Limited, general manager of Bangladesh Shilpa Bank (presently Bangladesh Development Bank Limited) and Rupali Bank Limited. He also sat in the board of Janata Bank Limited and Eastern Bank Limited in 1998. He also served in the board of Meghna Insurance Company Limited from 2000 to 2001. Currently, he is the Chairman of Greenland Equities Limited, Transvent International Limited and Support for Society of Rural Development.
He obtained his masters in Economics and honours from University of Dhaka in 1962. He started his banking career with Standard Bank Limited of Karachi in 1964. He also served as a part-time professor of Banking at Jahangir Nagar University. He was a Fellow of Economic Development Institute of World Bank and took active role in banking reforms commission sponsored by World Bank.
He is permanent member of Dhaka Club Limited, Life Member of Economic Association of Bangladesh, Life Member of Dhaka University Alumni Association and Permanent Member of Kurmitola Golf Club. He also served as the President and Deputy Governor of Rotary Club of Ramna.
Aveteran in the banking and financial sector, M A Hashem is fittingly judicious in his opinion, but never lacking clarity when he does speak his mind. His succinct answers have the command of the vast experience the man carries. But Mr Hashem’s wisdom is not pretentious. He is less jargon, more heart.
A camera shy person, Mr Hashem has always avoided limelight. “the last interview I gave was decades ago,” he said. He also expressed his unease with posing for picture. “I’m not very good at being comfortable in front of the camera,” he told our camera crew apologetically, during our interview with him at his office in Paltan’s DR Tower.
The veteran banker talked to us about what banking was like in Bangladesh in the 60s when he started, his thoughts on the current state of banking, merchant banking and why their progressed has stalled, the role of NBFIs, the economy, fintech and related subjects. Here is the full interview:
FINTECH: Tell us about how your banking career started?
MAH: Everyone was trying to get into a job after completing education. Some became professors, some went into government jobs, some in banking and so on. Those were considered “proper job” at that time. I joined the Standard Bank and I was posted to Karachi. There were very few Bengalis in the banks, because all banks were owned West Pakistanis. Later on the Eastern Bank and Pubali Bank were established and they were nationalized in 1972. Before that all were Pakistani banks like Standard Bank, United Bank, Habib Bank etc.
So, when I joined; they recruited 30 people. We took training and then we were sent to branches. I became manager of the Sylhet branch. I really enjoyed my time there.
FINTECH: What was the market like then?
MAH: It was very difficult from a business point of view. Money was not so abundant then. We started to bring small businesses on board and basically had to teach the banking culture. From there we started growing. When United Bank first started in East Pakistan that’s when banks started to proliferate and attitude toward banks started to become liberal. They did not do traditional banking, but they were very progressive. That’s why banking developed in East Pakistan.
But after the liberation when banking was nationalized, four banks were founded, Rupali, Sonali, Agrani and Janata. There wasn’t any private bank. But that changed of course, as you know, now we have 59 commercial banks.
Many say though that that’s too many banks considering the size of the economy. Some yet say that the economy is growing at a considerably fast pace, and it will keep growing and there will be competition. But the result has not been quite satisfactory.
FINTECH: Interestingly, Syed Mahbubur Rahman (MD, Dhaka Bank) said the same thing when we interviewed him in July. He said we don’t need more than 10 banks. Actually the he said “We need less than 10 banks,” to be precise. Is that something you will agree with?
MAH: I think the banking culture in our country is not congenial. Meaning, people are averse to repaying loans. That attitude has developed, which we didn’t see before. What we saw is that the attitude of the borrower was a genuine concern about how the loan will be paid back. But it’s the opposite now. Banks run after them. There are bad loans and that obstruct progress.
There is corruption and manipulation. There are a lot of classified loans.
The standard rate is that there should be no more than three percent bad loans. Because this is public money. But that money is not loaned judicially or prudentially. Now reality of the situation is, the bigger the client the bigger is their default; five thousand crore, six thousand crore bank loans. The assets do not correspond to the loans. This is the situation now. They take loans from many different banks. The rescheduling system is partly responsible for allowing them the chance to do this. But that is the culture and it’s not a good culture.
That’s why our growth seems man made, as opposed to natural growth. There have been advancements, no doubt. Standard of living is better, social index improved. But at the same time we have been damaged by this.
FINTECH: You previously held executive positons. You are a chairman now. How does this differ from when you were an MD for example?
MAH: There are a lot of differences. Actually we frame broad policy. The managing director implements policy. He has discretion of course. But he brings matters to the board and we give a collective decision. We don’t interfere in the day to day administration. So, our role is to oversee and not interfere.
But it is rather easy now compared to my time. We did record keeping manually. Everything is automated now. There’s been a lot of advancements, almost beyond belief. I left banking in the year 2000. A lot of technological advancement took place since then. We have mobile banking now.
FINTECH: What is the situation of merchant banking in this country? Is it growing?
MAH: Merchant banks did not play the role it should have, that’s why it could not establish itself here. Except one or two, everyone else is still struggling.
The role of merchant banks is to improve the share market. It’s not their real job to lend money, but to manage issue and bring in new issues. But a lot of the merchant banks failed to do this. As a result, we could not achieve the advancement we needed in the capital market. Our capital market is still, compared to other countries, is in infancy.
There is also a lack of coordination among government institutions, like Bangladesh Bank, the capital market and the administration as a whole. There is a lack of policy coordination.
FINTECH: But do you think that is improving though?
MAH: I think so. I have to say that the Security and Exchange Commission certainly deserves a lot of credit. There was a time when there was no commission. But there have been a lot of improvements in knowledge and control. But it hasn’t managed to be as efficient as many other countries, where they orchestrate a lot of things like taking over, convert to multinational, and so on.
FINTECH: Do you think there should be any conflict between NBFIs and commercial banks?
MAH: The objective of NBFI was to give quick delivery. In traditional banking there are lots of procedures. This takes 20 days, the other thing takes 30 days and so on. That’s where these organisations come in, where they do this work in three days. The rate of interest is high, but that is how they operate.
However, NBFIs don’t have their own fund. They can’t take long term deposits. So, they depend on the money market for fund.
FINTECH: You have a number of schemes for SMEs. SMEs are generally regarded risky, for obvious reasons. But shouldn’t the mechanism be in place already that will make SMEs safe investment?
MAH: Our vision for SMEs are based on good intention. If you deliver honestly and objectively then it will be successful. The person who does the inspection and give opinion should be very honest and transparent. If there is sincerity, then SMEs are a good thing. If SMEs don’t improve then there will be no economic development.
But the role of the government is very important. The infrastructure has to be there. All the basic things like roads, electricity have to be there, otherwise the mechanism will be faulty and it will produce failure. How will SMEs develop if you don’t have these basic things working for you.
FINTECH: Where is ILFSL focusing? Which segments you are giving priority to and where is the most growth?
MAH: The medium size industry is developing quite rapidly now. Engineering, light engineering and other medium proprietorship efforts are really developing. We have a women entrepreneurship program, where small and medium projects are undertaken. From a policy standpoint, women entrepreneurs are more sincere.
FINTECH: Is ILFSL adopting the technological advancements? What is your approach to it?
MAH: We are doing a lot of adoptions in accounting, monitoring and in all other areas. We are using automation in all aspects of our operation. It is not just beneficial but very much necessary.
FINTECH: One of the things we look into is the local solutions and if the local companies are relying on the local solution. Normally, it’s a vicious cycle of institutions asking for the equal credential as foreign developers and local developers saying that they need can’t have that credential if the local companies don’t take their solution. What is your thought on this?
MAH: Organizations want a flawless system. The trust is not there yet. I think our local solutions are very improved now. We have started exporting. Many good organisations are developing too. I think we should encourage them. We will be able to reduce our cost as well as we will develop efficiency if we can employ the service of local developers.
Hacking is a big problem. Security risk compels organisations to rely on foreign companies.
FINTECH: Tell us about your vision for ILFSL. What was the condition when you joined and where is it now?
MAH: When I joined, it was in a transition period. The ownership had been changing, mostly changed by the time I came in. Many people left and
their position was filled with new people. The first year after the transition was naturally very difficult. We strengthened our position last year. And now we hope that we are on the right track and we will keep improving.
FINTECH: If you are to describe the very core of your policy in simple words, how would you describe or summarize it?
MAH: I think we should be transparent in our activities. I believe we have to gain the trust of the people. If we can earn the trust of the people only then we can prosper. That is ultimately our policy.
FINTECH: As someone with an illustrious professional career, how do you see ‘success’? What makes people successful?
MAH: You will always have competition in any field. Not everyone becomes MD. It’s a little bit of luck too I think. I think I am successful as a banker. I joined as an officer and retired from managing director rank.
But I always say this though, that all of this has been possible because Bangladesh was liberated. In the Pakistani period there was no Bengali in higher ranks, other than rare exceptions. And had the country remained Pakistan no one would have been in high positions either. All of what we have now is because of Bangladesh. Same is true for other fields too.
FINTECH: Thank you very much for your time.
MAH: You are welcome. ■