Bank aims ru­ral up­lift of Bangladesh econ­omy

The Pak Banker - - COMPANIES/BOSS -

Is­lamic Bank Bangladesh Lim­ited (IBBL) will con­tinue to in­vest in the coun­try's ru­ral econ­omy as it sees strong growth po­ten­tial in the ru­ral ar­eas and mi­cro-fi­nance dis­burse­ment, its top of­fi­cial says.

Mo­ham­mad Ab­dul Man­nan, man­ag­ing di­rec­tor and chief ex­ec­u­tive of IBBL, said most Bangladeshis live in vil­lages and are largely re­main out of the bank­ing sys­tem. More than 80 per cent of Bangladesh's 80 mil­lion ac­counts are based in Dhaka and Chit­tagong cities.

"We see a strong growth in the ru­ral ar­eas, mi­cro-fi­nance and in­vest­ing in the ru­ral econ­omy - es­pe­cially in agri­cul­ture, agro-based in­dus­tries. In fu­ture, we will con­tinue to spend in fi­nan­cial in­clu­sion, sup­port­ing so­cial ven­tures and help the needy. Our growth will come from the key ar­eas of the econ­omy and ru­ral de­vel­op­ment," Man­nan told Khaleej Times in an in­ter­view dur­ing his visit to Dubai last week.

IBBL, which was es­tab­lished in March 1983 as the first Is­lamic bank in the South­east Asia, is the largest Is­lamic bank in Bangladesh. There are eight full-fledged Is­lamic banks and 17 con­ven­tional banks with Is­lamic win­dows, out of 56 sched­uled banks cur­rently op­er­at­ing in Bangladesh.

Bangladesh's Is­lamic bank­ing sec­tor makes up 35 per cent of the global Is­lamic bank­ing busi­ness and IBBL alone rep­re­sents 25 per cent of the to­tal Is­lamic bank­ing ac­tiv­i­ties in the world. IBBL has a cus­tomer base of 11 mil­lion ac­count hold­ers, out of a to­tal 44 mil­lion global Is­lamic ac­count holder base and a de­posit base ex­ceed­ing Tk640 bil­lion ($8.2 bil­lion or Dh30 bil­lion) and an in­vest­ment port­fo­lio of Tk560 bil­lion ($7.17 bil­lion or Dh26.3 bil­lion).

"We are the largest in­vestor in Bangladesh's trans­port, ready­made gar­ments, back­ward and for­ward link­ing of tex­tiles and hous­ing sec­tors - the most im­por­tant ar­eas in Bangladesh econ­omy. Our bank­ing has a very strong so­cial obli­ga­tion, obli­ga­tion to the peo­ple and to the coun­try. That's how we see the role of an Is­lamic bank," Man­nan said.

To a ques­tion, he said mi­cro-fi­nance rep­re­sents four per cent of the bank's credit port­fo­lio and is ser­viced by 22 per cent of IBBL man­power re­sources, re­flect­ing the len­der's strong com­mit­ment to the needy peo­ple.

"We are a ma­jor mi­cro-fi­nance in­sti­tu­tion and the largest Is­lamic mi­cro-fi­nance provider in the world. Bangladesh is the world's big­gest mi­cro-fi­nance hub and some of our mi­cro-credit or­gan­i­sa­tions are in­ter­na­tion­ally recog­nised and re­puted. How­ever, they all run on con­ven­tional credit sys­tem with high in­ter­est rates," he said. He said IBBL has a grad­u­a­tion process in mi­cro­fi­nance and it help the stu­dents grad­u­ate from mi­cro-fi­nance to mi­cro en­trepreneur­ship and then to a small and medium en­ter­prise en­tre­pre­neur. IBBL rep­re­sents 17 per cent of the to­tal SME bor­row­ers of Bangladesh, he said. Dif­fer­en­ti­at­ing his bank from con­ven­tional lenders, he said IBBL is an Is­lamic bank with a dif­fer­ence.

"Con­ven­tional bank­ing does not serve the poor, we do. Con­ven­tional bank­ing does not fi­nance based on moral val­ues or so­cial needs. We do. They are div­i­dend-driven. Our big­gest div­i­dend comes from em­pow­er­ing the peo­ple - our cus­tomers and help­ing the econ­omy. As a fi­nan­cial in­sti­tu­tion, we re­main highly prof­itable, de­spite sup­port­ing so­cial causes," he said. To a ques­tion, he said de­spite high de­fault ra­tion amongst ru­ral bor­row­ers the bank is de­ter­mined to sup­port them with ad­di­tional fund­ing with­out any com­mer­cial in­ter­est.

"We have re­cently granted an ad­di­tional Tk1 bil­lion to sup­port the ru­ral bor­row­ers to carry on with their projects - with­out any profit rate at­tached. We will be look­ing at get­ting back only the prin­ci­pal amount.

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