The current chairman of NRB Global Bank, Nizam Chowdhury says non-resident Bangladeshis (NRB) were neglected in the banking sector despite the huge contribution they make to the economy. This is what prompted him to launch the specialized NRB banking in Bangladesh.
Following his footsteps, soon other NRB banks began. With more workers going abroad and Bangladeshi workforce getting increasingly more exposed to the international markets, NRB banks may well play a much bigger role than they are doing now.
In interview with Fintech, Nizam Chowdhury talks about NRB Global’s role and how the economy is shaping up to be ‘bigger than ever before.’
How was 2018 for NRB Global?
It was pretty good. We gained a gross profit of about Tk110 crores. We paid 10 percent stock dividend. I think this has been a positive development.
The whole world is in a sensitive place economically and locally the banks are going through a small crisis of sorts, particularly with non performing loans (NPL). Because we are fourth generation bank, our NPL is relatively fewer in number. Overall, I would say 2018 went in our favour.
What is your take on the budget? Do you think it is bank-friendly?
The Tk5,23,190 crore budget is the biggest in the country since liberation. Naturally, it will go bigger with time and that’s what we expect too. The two ‘visions’ our prime minister presented: for 2021 and 2041, we have already achieved all the markers for becoming a middle income country. Our target is to become a middle income country by 2024.
The poverty line has improved as well and the budget hasn’t been only bank-friendly, but it has been a good budget overall. The general public understand budget only in terms of prices of commodities. But they don’t understand that budget plays such a big role in a country’s economy and its impact on GDP growth.
But people like us that work in this sector understand this. From that perspective this budget is of international quality. There is another example, when World Bank did not finance the Padma Bridge, we did it ourselves. For this Bangladesh government deserves our gratitude. The government also deserve praise for other projects like the Ruppur project, metrorail, Payra sea port and there’s also underground rail being planned.
We always say that intentional loan default must be stopped. There is profit and loss in business, it’s not just profit. But taking loans and laundering money in the guise of business can’t be the goal of business.
But we have been able to bring transparency in one area, compared to the past, which is in the tendering system. This has been enabled by digitization. This is a great achievement for our country, I think.
Other than that, there has been much development in the garments sector. We can go up to ‘billion’ even if we get foreign investment. Also, notice that half of the Tk30 to Tk35 billion foreign reserves in Bangladesh Bank is from remittance. Expat income is going up by the day. The important thing now is to bring foreign investment.
One great thing for us has been that we got permission from Bangladesh Bank for Islami banking. Although this is limited for now, we will get full Islami banking permission soon. We have already started this with 15 branches.
To come back to your question, when government increases capital it brings good results. We fear there might be a liquidity crisis, but the way investments are coming, we hope the government would not have to raise capital on that. To keep the economy going we need diversification of exports.
Banks are trying to make the retail products more accessible. What is your approach to this? Is it possible to make these easier?
Of course it’s possible. Taking out a loan is extremely complicated in Bangladesh. 98 percent of people don’t know how to make an application for a loan. It’s up to the banks, chambers of commerce and other related organizations to educate new customers.
You could have a broker system where a third party will assess and they will take a half percent commission against loans that get approved. You can make these things easier, but there has to be a will to make them happen.
The retail products are very much related to income level in the market. Bangladeshis get very low salaries. What kind of impact does that have on the economy?
Bangladesh doesn’t have low salary anymore. I don’t agree with that. I will include every sector in this. Salaries have increased fourfold in the government sector. And that is true for other sectors as well.
Incomes have kept up with spending, in fact surpassed the spending needs. There are people that earn Tk5 thousand, and someone else might spend Tk5 thousand on a meal at Westin. It depends on how people manage their lifestyle. Here, our peons get Tk16 thousand.
You have drivers getting Tk20 thousand, while you also have postgraduates willing to work for Tk10 thousand. This is because there is a lack of jobs in the market. Our job will be to create small entrepreneurs through retail banking. Instead of giving Tk100 crore to one person we should give that to 100 people. This will have better recovery as well. That is our target, to give loans to less fortunate people and create small entrepreneurs.
Fortunately for us, our human resources are getting richer. Now you can’t find people to give jobs in the rural areas, let alone in Dhaka. Why can’t you find people for work in a country of 190 million people? This shows that everyone is doing something.
So, we don’t have joblessness now.
Let me provide another information; every year 2 million middle-income families are emerging. They are getting there from being lower income. And from middle-income families, 5 to 6 hundred thousands are becoming high-income families. This is good news for a developing nation.
We need to be honest people as a nation now. If we have honesty then there will be less loan defaulting, less violence, less drugs problem and less killings.
Tell us about the situation with NPL at NRB Global. Your NPL went up 77 percent from 2017 to 2018 (from 61 crores to 108 crores). What is your plan for recovery?
We hope NPL will no longer increase, because everyone is alert now. Especially, our new finance minister said after his oath into the office: “I don’t want NPL going up even Tk1.” His statement has a weight. Everyone is taking this seriously, and no bank let NPL happen intentionally. This is often a result of process.
All banks are offering NBR products. What does that mean for NRB banks?
Everyone is doing it now because they never thought about it before.
I first introduced the concept. I told about my concept to the prime minister. After that three NRB banks were founded. Now everyone is thinking about NRBs. But before that no one either thought about them, or wanted to give them loans.
I think there is a healthy competition in the market. We want everyone to put more focus on NRB. This is good for the economy.
Talk about your future plans a little bit.
When I started this bank, we started with 17 products. I won’t say these products were immensely successful. This is due to the fact that expats don’t really have clear ideas about what to do with money when they return home after a long time.
So, now we are focusing on providing helpful market education and programs that aid NRB customers, so that they can utilize the vast experience they bring with them.
I think there are tremendous possibilities for NRBs here and we want to enable those possibilities.