BRAC Bank now largest retail bank in Bangladesh

Dhaka,  Mon,  26 June 2017
Published : 14 Jun 2017, 21:33:22
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BRAC Bank now largest retail bank in Bangladesh

Mehdi Musharraf Bhuiyan


Leading private commercial financier BRAC Bank is investing heavily in digital banking as part of making its retail banking more automated and customer centric, high officials of the bank has said recently.

The third generation bank, which has made exponential growth in its retail banking portfolio in recent times, is channeling around Tk. 2 billion in upgrading its core banking, internet banking and credit card software, the concerned officials said.

According to BRAC Bank sources, the bank's retail loan portfolio has increased from Tk. 21.80 billion in 2015 to 34 billion in 2016, witnessing more than 55 percent growth in a single year.

The bank now claims to be the largest retail bank in Bangladesh, with a total retail loan portfolio of Tk. 37 billion.

However, looking forward, the bank would resort to state of the art digital banking as well as the untapped market in suburban areas for the next wave of growth, officials informed.

"We are going to introduce the upgraded version of our core banking software by the first quarter of next year", Head of BRAC Bank's retail banking Nazmur Rahim told FE.

"At the same time, we are also investing in our internet banking while our credit card software will also be upgraded by the first quarter of 2018", he added.

BRAC Bank sources informed that they are also planning to upgrade their call center by middle of next year. At the same time, the bank will also work on developing a 'Customer Relationship Management' software from next year.

"Digital banking will be at the core of our future initiatives in retail banking area", Nazmur said, adding, "We want to offer customer centric and innovative products keeping in mind the need of the customers".

"Once the digital platforms are upgraded, this will enable our customers to do many things like cheque deposit in self service mode through online while many of our systems and processes will go paperless", Nazmur said.

BRAC Bank authorities also observed that there is a huge untapped market for retail banking beyond the capital city of Dhaka.

"For example, there is a Tk. 310 billion market for housing loan alone in suburban areas beyond Dhaka and Chittagong which remain largely untapped", said Nazmur.

Going forward, BRAC Bank officials however informed that they would focus more on personal loan and credit card segment for tapping this unexplored market.

"For the last few years, we have been quite aggressive about home loan. So much so that by the end of 2016, around Tk. 18 billion or almost 10 percent of our total loan portfolio was directed to housing".

"However, keeping in mind the central bank provision, which says that housing loan cannot constitute more than 10 percent of a bank's total loan portfolio, we are now focusing more on personal loan and credit card", he added.

BRAC bank officials noted that the main advantages of personal loans are that they are easy to obtain, they come with less hassles of security and they can be used for any purpose.

bKash-which is a subsidiary of the BRAC Bank already has an overwhelming presence in the mobile banking segment of the country. However, banking services offered through this scheme is overwhelmingly dominated by cash transfer.

Reflecting on this, BRAC bank officials informed that they are planning to diversify this mobile banking segment by offering a wider range of banking services through bKash.  

"Once our core banking system is upgraded, we would also like to offer a wider range of banking services including DPS and small loan through better integration of our system with bKash", Nazmur said.  

Lately, the central bank has directed commercial banks not to charge more than 5 percent on top of their highest interest rate of a consumer loan for credit card use.

Reflecting on the move, the BRAC Bank officials observed that in most countries of this region, interest rate on credit card is substantially high.

"For example, If this direction goes through, the interest rate on credit card, in our case, will come down to less than 18 percent", the BRAC Bank high official said, "Whereas, it is 42.5 percent in India, 46.5 percent in UAE, 26.5 percent in Singapore and 24 percent in Sri Lanka", he informed.

"Loans offered through credit cards are short term loans. The interest rate offered on short term loans are usually quite high", Nazmur said.

"In addition, there are administrative costs, liquidity costs and marketing costs which should be taken into account for fixing the credit card interest rate", he observed.    

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