Sherpa Hossainy's Blog

Financial inclusiveness should be banks’ target

Posted in Bangladesh, Business, Corporate, Dhaka by Sherpa Hossainy on January 2, 2012

Published in The Independent on 1 January 2012

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The country’s private banks should strive to serve the masses and promote financial inclusivity to bring them under a common economic system, said Muhammad A (Rumee) Ali, chairman of BRAC Bank. In an exclusive interview with The Independent, Rumee focused on the current banking sector scenario, and his bank’s service strategy, small and medium enterprise financing operations and its impending customer-centric banking model.

Muhammad A (Rumee) Ali, chairman of Brac Bank Ltd

What are the new products or services of your bank?

Brac has a subsidiary called “bKash”, which is our mobile banking wing, and this strategic investment intends to promote financial inclusivity for the masses. Opening bank accounts for bottom-of-the-pyramid people is difficult. They hesitate to come to a bank, and for them it’s a costly affair. For the real masses mobile banking is the answer because it opens new doors towards inclusivity. If you don’t give financial inclusivity to everyone it creates contradictions within the society. For people who can read and write and have fair knowledge to open a bank account we introduced the Access account, which is a no-fee account where people can easily access a bank account without going to banks. We serve them through our ATMs, where both the cash withdrawal and deposit can be done.

What is the overall performance of your bank?

BRAC Bank performed very well last year despite several constraints in the financial industry such as liquidity crisis and the stockmarket issue. The bank  successfully increased its book in terms of lending to the small and medium enterprises (SMEs), which is our main focus. The customer base significantly increased last year, which is now more than 1.5 million. We have also done some non-financial initiatives to promote financial inclusion such as Krishok card for farmers. We also introduced Probashi banking card for people who receive remittances.

What is your target for the next year?

We are planning to launch a new retail banking model, which concentrates more on customers rather than products. We have now put a team together and changing the existing model into a customer-based model. At the end of the day you are dealing with people, not with products. Products should be for people, people should not be for products. We’ll keep on pushing the same strategic issues and objectives to promote inclusivity and make finance more accessible to SMEs. But BRAC Bank is a full service bank so we want to give good products in the consumer banking sector and continue providing the best service to our corporate customers.

What do you think about spreading banking services to the people who are not covered by a bank?

BRAC Bank promotes financial inclusivity and that is why we are an SME-based bank. Traditionally small businesses have been out of the banking system and we are trying to bring them in. In every country, small and medium businesses drive the economy. The central bank in Bangladesh is already focussing on this but we need more traction. More banks need to get involved with small businesses. We are the pioneer and the leading bank in the country on small businesses and through bKash and Access accounts we are reaching out to the ‘unbanked’.

What about the rural banking services? How many branches of your bank are located in the village areas?

Sixty per cent of our branches are in rural and semi-urban areas and 40 per cent are in urban areas. I think BRAC is the only bank with this ratio in Bangladesh, except for state-run banks.

What is the uniqueness of your bank?

BRAC is perhaps the only bank with a specific mission and that is to support or create access for the SMEs. Other unique feature of the bank is that 60 per cent of the advances are in semi-urban and rural areas. Our branch and distribution structure is also unique.

What are the CSR activities of your bank?

I’ll start by saying that BRAC Bank itself is CSR. We are a bank with a mission. We promote financial inclusivity and we are looking at small businesses, and this is Corporate Social Responsibility (CSR) in its own. Besides, we are involved in many CSR activities, especially education.

Do you think there is any necessity of new banks?

If the question is approached from the point of view “are they serving the people?” or “are they getting more people involved in the banking system?” I think the banking industry has actually fallen short of expectations. If someone argues from that point of view that we don’t need any more banks, one has to agree to it. On the other hand, I think central bank should help   banks promote inclusivity. There are 45 banks in Bangladesh and from this point of view I don’t see any further need for banks but I think the emphasis should be now on the banks to move out and get more people involved in the system. That is where the regulators and the government should be pushing the banks. However, there is always a need for specialised institutions. If a group or bank can come up with specialised stream of products or specialised solution to a need in the economy, then that can be a reason why the bank should exist. Overall, as it stands now, we don’t need any more banks.

Do you think present lending rate is too high for growth of industrialisation? How can we reduce it?

I don’t think the rate is too high. If you look at the inflation rate you’ll see that the real interest rate is quite low. The interest rate is a function of lot of things such as monetary policy. When an economy is under inflationary pressure if you continue to keep the interest rates low the only thing that can happen is inflationary growth. When you set a price for lending to a customer you look at the availability of funds, the risks being taken and the cost of running an operation. If you take these things in consideration I won’t say banks are charging high interest rates. The central bank’s monetary policy in face of the inflationary pressure on the economy has been ‘not to move away from the accommodative policy.’ So, there will be pressure on the interest rates and that is true for any economy, and Bangladesh is not an exception.

What are qualities required to be a successful banker?

You should understand the economy, the dynamics of the banking system and most importantly remember that you are serving people and working with them — that is what successful banks and bankers do. Another thing is that, one should read about latest developments in the world of business, banking, management and leadership. This knowledge helps you to evolve yourself into a better banker. Many young bankers don’t care to do that.

What are the measures you are taking to reduce non-performing loans in your bank?

First of all prevention is better than cure. We have to prevent bad loans from happening. So you must have a very robust process of credit approval so that you know that you are doing the right thing. Internally, it can be bad management or bad financial management, and there are also technical reasons  behind bad loans. In terms of the external problem when the economy is in downturn you should help the customer to tide over that period. Dialogue with a customer and understanding the situation is very important. It is the question of due diligence before you give a loan. You must understand that the person has the knowledge and capacity to run business, he must understand some particular technical side of the business and finally the product right for the consumer that he is trying to sell. As far as recovery is concerned once a bad loan is done it is important to keep the dialogue going with the customer. You can be helpful or be unhelpful. I don’t think being unhelpful helps you to collect the loan. Particularly those customers who don’t want to default but they failed due to external reasons. When a bank gives loan it starts a partnership with the customer and the approach from that point of view.

What kind of policy support is needed for the improvement of banking sector?

Bangladesh Bank has been extremely proactive, particularly in the area of inclusivity and in supporting small and medium enterprises. The monetary policy also has to be right so that the banks do not get caught in a wrong situation. Supervision of banks is also very important. Sometimes when a bank is in bad shape, it affects other banks too because it erodes the confidence of industry insiders. These are the areas we hope there will be continuous policy support from the central bank and the government.


FAS to disburse $660m car, housing loans

Posted in Bangladesh, Business, Corporate, Dhaka, Finance by Sherpa Hossainy on November 3, 2011

Published in The Independent on 30 October 2011

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FAS Finance and Investment, a leading financier in Bangladesh, is going to provide financing worth $660 million (Tk 5,000 crore) in housing and car loans by 2013, a top official of the company said.

“We are expecting to disburse Tk 700 crore by March 2012, Tk 2,500 crore by December 2012 and Tk 5,000 crore by December 2013,” said Abdul Matlub Ahmad, chairman of Fidelity Assets and Securities (FAS) Finance and Investment Ltd.

In a bid to introduce the financing concept, FAS, a sister concern of Nitol-Niloy Group, has arranged a year-long fair termed “Gari-Bari Mela” at Hotel Abakash in Dhaka. The fare will be held every Saturday.

Ahmad said that presently customers suffer from non-delivery of housing units and abnormal time to complete housing projects by various builders. “This fair will help buyers to get immediate possession of flats and cars without hassle by supporting them with instant sanction of loan advice,” he said.

“Customers would be able to purchase low cost homes, office spaces or shops, which have already been built or would be built in a year or more, by availing loans from FAS,” Ahmad said.

Moniruzzaman Akan, assistant vice president of FAS, said this [the fair] is a one stop service to cover two prime needs of middle-class customers.

“If buyers pay 30 per cent of the price of a flat or a car on the spot, they will get the rest 70 per cent as loan from FAS. Upon payment of the loan, the customer will get the ownership of the flat or the car,” Akan said.

Ahmad expressed satisfaction over the proceeding of the fair, and said that more than four units of houses and six units of vehicles were sanctioned on Saturday, the opening day of the fair.

“Numerous offers from proposed buyers had been received which will soon mature into positive sales. We are very happy with the tremendous response from public,” he said.

Twelve companies — nine realtors, one insurance company and two vehicle dealers — are participating in the fair. The companies include Concord Group, Rupayan Group, Mega Builders and Tropical Homes. FAS will also provide financial support to the builders in installing generators, LP gas and solar panels in their apartments to ensure timely hand-over of the flats, Ahmad said.

“Some banks namely State Bank of India, Pubali Bank Ltd and Mutual Trust Bank, already gave their go-ahead to finance this project and I hope more banks will be interested,” the FAS chairman said.

SAP to help Bangladesh enterprises run better

Posted in Bangladesh, Business, Computer, Corporate, Dhaka, IT, Software by Sherpa Hossainy on July 30, 2011

Published in The Independent on 28 July 2011

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Leading German enterprise application software company SAP AG on Wednesday announced the launch of its “run better solutions road show” in Bangladesh in a bid to deliver proficient and effective business outcomes for its customers here.

“The show aims to provide a platform for businesses to meet, learn, understand and interact with industry and solutions experts and other successful SAP customers,” said Deb Deep Sengupta, vice president, enterprise sales of SAP.

Enterprises across industries in Bangladesh are relying on SAP software and services to automate and gain better customer insights as well as enhance their global competitiveness, he added.

SAP felicitated nine Bangladeshi enterprises for their successful adoption of SAP enterprise solutions at the event held in Hotel Westin organised by Concito PR.

Leading customers in Bangladesh who use SAP platform include: Berger Paints Bangladesh Ltd, Viyellatex Ltd, Robi Axiata Ltd, Incepta Pharmaceuticals Ltd, Rahimafrooz Bangladesh Ltd, Gemcon Foods and Agricultural Products Ltd, Otobi Ltd, MGH Holdings Ltd, and Karnaphuli Fertiliser Company Ltd.

Peter Gartenberg, managing director of SAP, said, “We will focus on Bangladesh to deliver world class business solutions to enable enterprises of all sizes run better and achieve business excellence.”

SAP empowers people and organisations to work together efficiently and use business insight to stay ahead of the competition by extending the availability of software across on-premise installations, on-demand deployments, and mobile devices, he added.

Over the years, SAP has been involved with many projects across industry segments including telecom, banking and financial services, pharmaceuticals, textiles, ready-made garments, retail, real-estate and several diversified conglomerates.

SAP has invested in creating an ecosystem of partners including Optimal Solutions and Aamra Management Solutions Ltd to expand its footprint. SAP leads the enterprise applications market with its portfolio of flexible, cutting-edge solutions and continued innovation, Gartenberg said.

Sengupta said SAP’s power of people, products, and partners unleash growth and create significant new value for customers, and ultimately entire industries and the economy at large.

“The technology platform will allow customers and partners to gain insights for improved performance, efficiency for optimised operations and the flexibility to adjust to new business requirements,” he said.

SAP is headquartered in Walldorf, Germany, providing enterprise software applications and support to businesses of all sizes globally. SAP is the largest enterprise software company in the world, as of 2009 and best known for its SAP Enterprise Resource Planning (SAP ERP) and SAP Business Objects software.

Founded in 1972, SAP (Systems, Applications, and Products in Data Processing) has more than 109,000 customers worldwide and operating revenue of over €12.4 billion (2010). SAP employs more than 53,000 employees in more than 75 countries worldwide.

Acer launches flagship ICONIA tablet PCs

Posted in Bangladesh, Business, Computer, Corporate, Dhaka, Internet, IT, Software, Technology by Sherpa Hossainy on July 21, 2011

Published in The Independent on 15 July 2011

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Acer, world’s second largest PC vendor, on Wednesday launched five of its ICONIA series tablet PCs on Google Android Honeycomb platform for the first time in the Bangladesh market.

The new range of tablets — ICONIA Tab A500 and W500, ICONIA dual screen notebook, ICONIA A100 and Smart S300 — will be marketed by Acer’s authorised distributor, Executive Technologies Ltd (ETL). However, A100 and S300 models will be available in the market after four months, ETL officials said.

A model displays an Acer Iconia tablet

The ICONIA Tab A500 will be priced at 45,800, and the 10″ Windows Home Premium, with portable keyboard and Windows 7 operating system, will be priced at Tk 52,800.

The ICONIA Tab A500 and W500 are 13.3mm thick and have 10.1″ touch screen and Aluminum casing. The A500 is equipped with NVIDIA Tegra 2 dual core 1.0 GHz processor with Flash 10.1 support featuring Sky Cross antenna and ZTE LTE wireless module.

ICONIA Dual screen notebook has Intel Core i5 processor with Windows 7 operating system. The 14” notebook has high-definition widescreen LED backlit LCD screen.

The Acer tablets are equipped with a full size USB port, mini USB port, HDMI output, Micro SD card and SIM card support.

S Rajendran, chief marketing officer of Acer India, said, “With a first mover advantage on our Android 3.0 Operating System, we are confident to address the rapidly growing consumer IT segment in Bangladesh.”

The ICONIA A100, a 7” Android tablet, is designed for mobile experience and includes video chat and video recording options. The S300 model, a 4.8” Smartphone on Android Gingerbread 2.3 operating system with 8 megapixel camera, is targeted at avid mobile internet users.

The ICONIA series is a concept device featuring an intuitive all-point multi-touch functionality, offering a range of devices such as smartphones, notebooks and tablets.

Acer is the first PC vendor to launch its tablets under both operating systems — Google Android Honeycomb 3.0 and Windows 7, the officials said.

The Acer tablets also feature media sharing system to share content amongst the gadgets. It will be preloaded on the device to access, play and share multimedia across the home network and to instantly publish updates to social media networks.

Salman Ali Khan, deputy general manager of Executive Technologies Ltd, said, “We believe our association with Acer will bring a new dimension and help us deliver through our distribution network.”

As consumers adapt to new technologies ETL is confident to address the growing IT market of Bangladesh, he added.

Acer registered 100 per cent growth for the last two years, and employs about 8,000 people worldwide. In 2010, Acer’s revenues reached $19.9 billion, and it sold 39,926 units worldwide.

Marketing guru asks youth to go global

Posted in Bangladesh, Business, Celebrity, Corporate, Dhaka, Economy, Gurus by Sherpa Hossainy on June 11, 2011

Published in The Independent on 9 June, 2011

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Marketing legend Philip Kotler, on Wednesday, asked the Bangladeshi youth to embark into the global marketing scenario to enhance the brand image of the country.

“I want all of you to be crusaders in the international marketing field and create some pioneer Bangladeshi brands,” said Professor Philip Kotler.

He was speaking at a lecture session for the youth titled “Inspiring the future minds”, organised by Bangladesh Brand Forum in Mirpur Indoor Stadium in Dhaka.

“Doing your product’s marketing in a different country is risky and could become difficult. You should have the knowledge of the culture, language and the philosophy of that place. You might want a local partner to do business with,” said the professor of international marketing at the Kellogg School of Management, Northwestern University.

Kotler told some 2,500 future leaders to think out of the box and be involved in every aspects of marketing to promote quality products from Bangladesh.

“You should be able to think horizontally, not vertically. If you are not thinking horizontally, you are not thinking about your business as a whole. You’ll get stuck,” said Kotler, widely regarded as the father of modern marketing.

The marketing guru also advised the youth that he would like all of them to study finance besides marketing to move up the ladder in an organisation.

“Sometimes finance could be boring with all the numbers, but a blend of marketing and finance is the key to make a company successful,” he said.

Dr Philip Kotler giving his lecture to the youth at Mirpur indoor stadium, Dhaka on 8 June, 2011

Kotler said the major global companies are increasingly using social media like facebook and twitter for marketing and they need young professionals who can apply their skills there.

“Social media is especially important for companies that want to reach young people. You will be needed as social media experts because the youth are better at it than the seniors,” he said.

Although Kotler remained sceptical about 100 per cent social media based companies saying that would be “a disaster”.

“I would advise, 90 per cent advertisement based and 10 per cent social media based companies. They can research and learn the latter’s impact and make plans on how to use it effectively,” he said.

He predicted that there will be a certain point in the future when there will only be good companies, as the bad ones will be eliminated by the customers’ social media campaign.

Professor Kotler, consistently ranked amongst the top 10 business thinkers of the world, stressed the need for more customer engagement and structured customer relationship management.

“A brand is a promise, it is the way you manage expectations of the customers. So get close and know your customers, build customer database and focus on their needs,” he said.

Kotler said the previous marketing theory of infinite resources and infinite needs is redundant in the contemporary world. The theory has now changed into “finite resources and finite needs.”

Professor Kotler, the author of ‘Marketing Management’, which is the most widely used marketing textbook in graduate schools of business around the globe with 20 million plus copies sold, also stressed on poverty alleviation through social marketing.

“Besides product, price, place and promotion there’s a fifth ‘P’ now – ‘purpose’. You have to put together these five ‘P’s and implement them for social marketing,” Kotler said.

Kotler advises Bangladesh to set focal points for growth

Posted in Bangladesh, Business, Celebrity, Corporate, Dhaka, Gurus by Sherpa Hossainy on June 8, 2011

Published in The Independent on 8 June, 2011

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International marketing guru Philip Kotler yesterday advised Bangladesh to identify its priority sectors to become a developed nation.

“Study the best companies in each industry, chose industries that you want to be best in and then reach out,” said Kotler, revered as the father of modern marketing.

Philip Kotler said that Bangladesh is doing well in ready made garment products, pharmaceuticals and food production but it still has not worked out in which sector it wants to be a pioneer.

“It is up to the government to help figure out what industries are the future and which one should be nurtured,” Kotler, professor of international marketing at the Kellogg School of Management at Northwestern University, said.

Dr Philip Kotler, the father of modern marketing

Kotler cited the examples of Japan and Singapore’s rise as economic superpowers and advised Bangladesh to follow the same strategy.

“Japan started by copying US products, but they made them better and hence came the term ‘made in Japan’. Now the USA envies Japan as their products are superior.

“Singapore is only a city, even smaller than Dhaka. They decided they are good at three basic things: education, health service and finance. Now they have become a financial capital for the region,” the professor said.

He said Bangladesh has to promote the brand “Made in Bangladesh”. He also recommended making industries that can generate foreign currencies, and attract foreign companies.

Kotler said that Bangladesh should be included in the BRICS (Brazil, Russia, India, China and South Africa) as it is a big country in terms of population.

He also asked Bangladesh to learn from the examples of India and China in poverty alleviation.

Kotler said: “Your neighbours India and China is working hard on finding ways how to make things cheaper so they can be afforded by the poor people. You should be doing the same.”

Kotler also expressed his keen interest in Bangladesh economy and market and lauded Muhammad Yunus and Grameen Bank for their efforts in social marketing.

ICAB for fresh tax ceiling

Posted in Bangladesh, Business, Corporate, Dhaka, Finance by Sherpa Hossainy on June 8, 2011

Published in The Independent on 7 June, 2011

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The government should bolster direct tax collections rather than relying heavily on indirect taxes, the regulatory body for chartered accountants suggested on Monday.

“To eliminate growing economic inequality the government should emphasise on simpler direct tax collection method,” said Parveen Mahmud, president of the Institute of Chartered Accountants of Bangladesh (ICAB).

She was speaking at a press conference on the national budget 2011-12 at the ICAB auditorium in Dhaka, where she presented a summary of a 47-point proposal ahead of the upcoming budget.

Mahmud said, “Increasing the tax department’s efficiency and redefining slabs of income and scopes of tax is essential.”

The ICAB president informed that only 7 lakh people, among 22 lakh having Tax Identification Number (TIN), submit tax returns. The rest don’t as their income is under the minimum taxable level, she said.

She proposed an amount of Tk 2,500 to be imposed as renewal fee for the TIN certificate for such non-submission of the return.

“This is likely to increase the total tax revenue by Tk 375 crore ($53.57 million) a year,” Mahmud said.

She said that there are many NGOs who do not submit their tax returns. NGO affairs bureau can ask them to produce the current tax clearance certificate before renewing enlistment, she proposed.

Mahmud also proposed to raise the current tax-free income limit for male and female senior citizens (aged 65 years or more) to Tk 200,000 and Tk 225,000 respectively, which is now Tk 165,000.

“Minimum tax may also be increased to Tk 2,500 from Tk 2,000 taking the rising inflation into account.

“The limit of tax-free perquisites (house rent, conveyance and medical allowances) in case of salary income could also be increased up to Tk 400,000 from Tk 250,000,” she suggested.

Extending tax-holiday scheme, which is due to expire on June 30, for five more years, reducing corporate tax rates, single VAT registration for all business premises and developing a unique VAT software for NBR were among other proposals from the ICAB.

Reduction of import duties for raw materials and machineries to increase the competitiveness of locally manufactured products is also necessary, Mahmud said.
The budget for the financial year 2011-12 is going to be placed in the national parliament on June 9.

Chartered accountants asked to follow ethical standards

Posted in Bangladesh, Business, Corporate, Dhaka by Sherpa Hossainy on June 1, 2011

Published in The Independent on 29 May, 2011

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Chartered accountants need to maintain their professional ethics more than any other occupation as their work affects the public at large, said Shafique Ahmed, minister for law, justice and parliamentary affairs, on Saturday.

“Chartered accountants should be vigilant so that the trust of companies, organisations and public does not get hurt,” Ahmed said.

The minister was speaking as the chief guest at a Centre for Policy Dialogue (CPD) seminar on professional ethics, conflicts and auditors’ independence organised by the Institute of Chartered Accountants of Bangladesh (ICAB) at the ICAB auditorium in Dhaka.

He said that investors and stakeholders invest their money counting upon chartered accountants’ audit reports. Government also relies on the audit reports to outline policies on collecting taxes and duties, he added.

Parveen Mahmud, president of ICAB, said: “To ensure their independence, internal auditors must carry out their work freely and objectively.”

Sabbir Ahmed, director of Hoda Vasi Chowdhury and Co. Chartered Accountants, presented the keynote paper in the seminar.
He said, “Ethics is about self-governance. The chartered accountants should not only safeguard their independence but also safeguard the independence of the profession as a whole.”

ASM Nayeem, council member and former president of ICAB, also spoke in the seminar.

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