NRB Commercial Bank Ltd, which was hit with loan irregularities soon after its launch, is rebounding on the back of support from the directors, empowered management and intensified efforts to cut bad loans, said its top executive.  

A new generation lender, the bank was set up in 2013 in a market where a relaxed credit culture is deep-rooted – a situation that makes it difficult for the new banks to flourish, Khondoker Rashed Maqsood, managing director of the bank told The Daily Star in an interview at his office recently. 

NRBC Bank came under criticism three years later when the central bank discovered loan irregularities committed by some of the board members.

In 2016, the BB identified loan irregularities involving Tk 700 crore but the money was not taken out of the bank, said Maqsood.

The board was reconstituted in December 2017 to establish discipline in the new bank.

He said the bank has recovered all the loans that were given through irregularities during the tenure of the previous board.

In case of some borrowers, it brought down the loan balance to zero as per the central bank's instruction.

“The bank has made strides in improving the loan recovery and deposit hunting in the last one year and restoring public confidence,” Maqsood said.

Now, there is no interference by board members when it comes to loan processing and the management has been empowered, leading to the significant improvement in the health of the bank, he said.

Maqsood says failure to repay loan is bad but this perception did not grow in the market. Rather, clients like to avail the facility of a relaxed policy to prolong their loan repayment.

There are a few clients in the market and all the banks are running after them and the behaviour of the clients, who are overbanked, cannot be changed because they are used to take loan in a relaxed way, he said.

“So, the business strategy of NRBC Bank is to expand consumer banking business with a focus on the small and medium enterprises segment.”

NRBC Bank wants to work in the segments where the bank can control the credit behaviour of clients.

It also does not want to compete with big banks and instead wants to explore the opportunities in the areas where they do not tread.

“We are working to be a bank for all. Our target is to reach the remote people to encourage them to make savings,” said Maqsood.

He said the bank does not give less importance to small depositors who come to the bank to deposit even only Tk 500 and this has paid off.

The bank mobilised Tk 1,800 crore in the last one year and all are small deposits. At the same time, it gave up expensive deposits to bring down the cost of fund. 

The bank slowed lending activities throughout the year and intensified loan recovery. As a result, it was able to reduce the default loan drastically.

The bank's deposit growth rose 18.72 percent in 2018 from 3.35 percent in 2017. The loan growth fell to 12 percent from 14.82 percent.

The default loan came down to 1.95 percent in December last year, way down from 7.95 in September, according to BB data.

“The main target of the bank is to gain public confidence,” said the CEO.

When the banking sector faced severe liquidity crisis last year, NRBC Bank efficiently managed liquidity by putting intense efforts on deposit collection.

The loan deposit ratio, which indicates the basic health of a bank, was more than 90 percent at the beginning of 2018, beyond the authorised limit of 85 percent. It, however, came down to 83 percent in June last year, said the top executive.

Maqsood, who had long experience working in a foreign bank, joined NRBC Bank in April last year.  The bank is one of the lenders that takes a number of government services to the beneficiaries.

It distributes various government funds such as old age and widow allowances.

It is serving 37 lakh users of state-run Bangladesh Road Transport Authority (BRTA) as the government's agent bank.

The bank plans to set up booths in 64 districts to provide the service to the BRTA users.

“The benefit is we are getting a huge database of car users, which will enable us to expand business in the automobile market.”

The bank plans to spread its service across the city through setting up booths.

The BB has recently issued a new guideline on booths in order to help banks cut cost and the concept came from NRBC Bank, he said.

NRBC Bank already set up 10 booths in the city, he said. 

The size of the booths will not be more than 1,000 square feet with full-fledged banking operation, whereas a branch requires at least 3,000 square feet of space.

As of 2018, the bank has 68 branches, eight authorised dealer branches, 50 ATM booths, and 563 agent points.

The 51-year-old aged banker says the bank could not do much for the non-resident Bangladeshis due to limitations caused by rules.

“We are working with the central bank to help non-resident Bangladeshis open accounts and carry out banking transaction smoothly.”

As many of the bank's directors live abroad, it had faced trouble in the past in ensuring the attendance of the directors in board meetings.

There was even incidence of signature forgery in case of a director who was not present in a board meeting. Thanks to the central bank's permission, NRBC Bank has got rid of the trouble. Now, directors can attend meetings through video conferencing if they cannot show up. 

In discussing the government's plan to provide permissions to set up new banks, Maqsood said nine fourth-generation banks have already established their footprint in the market.

“If more banks are allowed, they will also be able to establish their position. But the government will have to ensure that the new banks can stand on their own feet.”

Without citing name, he says a new generation bank has been kept alive artificially by providing government support.

“This will distort the market. If a bank can't survive on its own, let it collapse,” he said.