ABB seminar on banking identifies
Financial market experts at a seminar on Saturday said that lack of monitoring, moral decay, credit concentration and risk management were the key challenges for the future banking in Bangladesh. In the seminar on banking titled ‘future vision’, they said fraudulent activities of same nature were taking place in the financial sector repeatedly but the central bank had failed to take necessary steps to check such anomalies as the organisation is not fully autonomous.
The Association of Bankers, Bangladesh organised the seminar at the Radisson Hotel in the city.
‘There is a big risk of credit concentration as banks are lending money within a few numbers of customers but are not developing entrepreneurs,’ said Khondkar Ibrahim Khaled, former deputy governor of Bangladesh Bank.
He urged the banks’ owners to build culture of ethics and said that introduction of latest information technology and skill is a must for efficient banking but the workforce that would operate IT should have ethical standard.
‘There was a well-equipped IT section in Basic Bank but occurrence had taken place in the bank due to lack of ethics,’ Ibrahim said.
He said that in the developed countries the spread between deposit and lending interest rates was less than 3 per cent whereas the spread in Bangladesh was 6 per cent- 7 per cent as the banks’ owners created a monopoly for not decreasing the lending interest rate.
Ibrahim said that the central bank had failed to regulate the issue.
Dhaka University professor MA Taslim said that monitoring in the financial sector was crucial as banks were affected all sectors would be affected.
Same type of fraudulent activities was occurred in the banking sector and the capital market repeatedly but the central bank did not take proper action as the officials of BB were appointed by the government, he said.
Taslim said that the IT security should be one of the top priorities for the future banking.
In the inaugural session of the event, BB governor Atiur Rahman said that banking in Bangladesh faced a multitude of challenges on the way forward including adjusting to technological changes, risk management and stability.
‘Laps and slippages in ethical standard in bank boards and senior managements had much to do with causing the last global financial crisis, just as in recent local episodes of banking scams and loan fraudulences,’ he said.
Shitangsgu Kumar Sur Chowdhury, deputy governor of Bangladesh Bank, said that banking system in Bangladesh was prone to credit concentration risk and the banking sector capital adequacy ratio would get seriously impacted if 10 large borrowers default.
He stressed on measures for mitigation credit concentration risk and protection from IT-based forgery.
In the opening session, former managing director of JP Morgan for Asian countries Jan Vasko presented the key note paper identifying tougher regulation, intensifying competition and increasing cost as challenges for the future of banking in emerging markets.
He said that the industry was facing continuous pressure on business models from regulatory changes, particularly Basel III.
Prices for banking products are also being changed but international banks are coming under competitive pressure from local banks in some markets, he added.
ABB president Ali Reza Iftekhar, Bangladesh Association of Banks chairman Nazrul Islam Mazumder and the Financial Express editor Moazzem Hossain also spoke at the programme.
-With New Age input
