Muklesur Rahman, Chairman of the newly formed Executive Committee of National Bank’s Board of Directors, is tasked with the critical responsibility of reviving the financial stability of the debt-laden bank.
In an interview, Rahman reflects on the banking sector's challenges and his recovery strategy.
When asked about his tenure as the founding CEO of NRB Bank, Muklesur said, “Establishing the bank was fraught with difficulties. Although the founding chairman, Iqbal Ahmed Avi, envisioned attracting foreign investment and boosting remittance inflows, the plan faltered.”
He attributed this to internal disagreements among the entrepreneurs, including some local businessmen posing as expatriate investors, ultimately recycling domestic funds. “Despite these hurdles, I was able to bring the bank into profit within three years. But, I resigned from my post later amid undue pressure from entrepreneurs to extract funds and employ their people,” he said.
Muklesur further discussed the downfall of banks like Farmers Bank and the fragile state of newly approved financial institutions. He pointed out that political pressure led to the approval of many banks the country didn’t need, a problem compounded by inexperienced entrepreneurs.
He said that while previously private banks avoided loan defaults, after 2013-14, fraudulent activities within banks surged, with directors embezzling crores of taka. He linked these issues to poor institutional governance, including within Bangladesh Bank.
On his plan for National Bank, Muklesur acknowledged that a large portion of its investments had turned into non-performing loans. “To address this, I proposed a two-pronged approach: aggressive recovery of defaulted loans and a complete restructuring of the bank’s processes, products, people, and technology. Placing the right individuals in key positions is the top priority now,” he said.
Muklesur also acknowledged a liquidity crisis in 10 weaker banks. “In meetings with the Bangladesh Bank Governor, Ahsan H Mansur, I learned that no more money would be printed to ease liquidity but that bond issuance opportunities guaranteed by Bangladesh Bank would help the banks recover,” he said.
On the issue of youth unemployment, he urged young people to focus on entrepreneurship, citing examples from countries like China and Indonesia. He noted, however, that banks’ reliance on collateral for loans presents a significant challenge for budding entrepreneurs. “During my time at Shimanto Bank, I implemented the ‘Nari Shakti’ programme, offering collateral-free loans to women, and I think similar initiatives could support new entrepreneurs,” Muklesur said.
He also urged bankers to shift away from an urban-centric mindset and invest in the development of small and medium enterprises for sustainable economic growth.
Source: Kaler Kantho (Translated)
BDST: 1154 HRS, OCT 06, 2024
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