Azam J Chowdhury, chairman of Prime Bank, said increasing capital base through offering different kinds of instruments is necessary to consolidate a bank's foundation to withstand new challenges in the post-MFA era, face competition and comply with international operating standards.

As the Prime Bank Limited is celebrating its 10 years of operations this month, the third generation private commercial bank plans to undergo strong consolidation process in the coming years, Chowdhury said in an exclusive interview with The Daily Star.

He said, "Maintaining credit quality should be the main objective of a bank. Capital adequacy, asset quality, sound management, reasonable return on shareholders' equity and strong liquidity with full automation and online banking services will decide the battle of best performers in banking sector in the coming years."

Diversified financial products, innovative retail banking and strengthening client base by reaching common people will be the key to success in banking, said the Prime Bank chairman.

Prime Bank, with striking performance in last few years that gave birth to greater competition in the banking arena, has drawn up a five-year consolidation programme starting this year.

Ranked second among the private commercial banks (PCBs) with Tk 106 crore net profit in 2004, Prime Bank will invest Tk 35 to Tk 40 crore on automation in coming 4-5 years and will be offering a state of art technology for real online banking. "The manual system will go," said Chowdhury.

Prime Bank, which has solid and strong financial health and track record, will still go conservative on adding new branches to its current network of 36.

Dwelling on the bank's resounding performance, he said, "At Prime Bank, jobs of directors and management officials are clearly defined. Directors dare restricted only to policy making and management staff get a congenial atmosphere to work independently and apply their professional acumen."

The non-interference of board of directors in day-to-day operation makes a difference in the Prime Bank performance, he said. "Prime Bank is the first bank that preemptively took a policy decision that no director can borrow money from this bank. Afterwards other banks followed suit and finally the central bank made it a law," said Chowdhury.

At Prime Bank even directors cannot influence loan sanctioning as loan proposals are meticulously scrutinised to see viability of the investment, he went on.

Apart from internal management audit, the board of directors conducts its own audit through Board Audit Cell, which lends authenticity to the process, he said.

The bank maintains a close contact with the borrowers, helps them to detect their problems at the initial stage, monitors their projects to ensure smooth recovery and even at times extends support to bail the clients out of crisis, he said.

Prime Bank is looking for new methods to transact remittance in the quickest possible time without any hassle. The bank may issue identity cards for senders and receivers to resolve the identity problem.

With five Islamic banking branches at present, Prime Bank has sought permission from Bangladesh Bank to completely separate operations of Islamic branches from mainstream banking by segregating one function from the other.

The chairman of Prime bank proposed raising paid-up capital from Tk 100 crore to Tk 200 crore. He appreciated the central bank leadership in financial market saying BB now supervises micro level issues, which ensures transparency and accountability of all commercial banks.

Deposits of Prime Bank increased by Tk 758 crore during 2004 recording a growth of 37 percent. At the end of 2004, total deposits stood at Tk 2,806 crore. Loans and advances grew by 40 percent during the year. Capital adequacy stands at 10.74 percent, which is 1.74 percent higher than the stipulated rate of 9 percent. The ratio of non-performing loan to total amount of loan is 1.52 percent.

The bank believes that investment in human resources development is key to maintaining a bank's sound health. In 2004, 23.98 percent of the bank's value addition was enjoyed by its 910 employees.

"Institutionalisation and setting up policies are key to long term success of a bank. Bank is a different kind of organisation, it is a custodian of public money. It is an organisation for generations," Chowdhury summed up.