Digital banks likely to reduce financial sector risks: Cenbank governor

Digital banks are expected to reduce risks in the financial sector by providing paperless financial services, Bangladesh Bank Governor Abdur Rauf Talukder said on Thursday. 

Speaking at a session on the last day of a two-day conference of the Commonwealth Trade and Investment Forum, the governor said, "In terms of conventional loan disbursement, verifying documents consumes time and creates risks sometimes. There will be no risk as the credit rating will be virtually in digital banks. The customer's digital transactions will be considered as proof of his financial capability." 

He added that it is important to implement "corporate governance" for the development of the country's banking sector and every financial institution should start it on its own.

The governor proposed more "knowledge and problem sharing" between central banks of Bangladesh and other developing countries of the Commonwealth for the development of the financial sector. 

Photo: TBS

He said with the expansion of the digital economy of the future, banks will have to develop skilled human resources in cyber security. In this regard, international platforms like the Commonwealth can play an important role.

This year's Commonwealth Trade and Investment Forum conference in Dhaka concluded with the promise of enhancing cross-border investment to flourish respective economies.

There were nine sessions on investment, banking, technology, Cameroon's economy, pharmaceuticals and public health, SMEs, green finance, tourism, and international supply chain on the concluding day of the conference at Intercontinental Dhaka on Thursday.

Planning Minister MA Mannan, State Minister for Foreign Affairs Shahriar Alam, and Commerce Ministry's Senior Secretary Tapan Kanti Ghosh attended various sessions on the concluding day.

Unlocking trade prospects in Africa

In the session on investment potential in Cameroon, State Minister for Foreign Affairs Shahriar Alam said Bangladesh has adopted a policy called "Look Africa" during the tenure of the incumbent government through which Bangladesh embassies have been opened in different African countries.

There are many similarities between Bangladesh and Cameroon, he noted, adding that Bangladesh's exports to Cameroon are very small while imports currently stand at about $160 million. 

The government now wants to unlock the trade prospects within African nations, envisioning Cameroon as a strategic hub for this endeavor, he added.

Also at the event, Minister MA Mannan invited investment from Commonwealth countries to achieve economic benefits of infrastructure development in Bangladesh.

Thrust on green finance

In another session titled "Green finance and sustainable economic growth", Senior Secretary Tapan Kanti Ghosh said, "We formulate a lot of policies to reduce carbon emission particularly when it comes to international trade and the import and export policies. 

"We've introduced a technology upgrade fund to facilitate industries to upgrade technologies that will reduce energy consumption and carbon footprint. Besides, if someone uses renewable energy, then the tax may be lower and he might get a loan at a lower interest rate."

Banking as a service

Standard Chartered Mauritius CEO Abrar A Anwar said the concept of "banking as a service" has now gained momentum for global financial inclusion where startups and other technology-based platforms are providing services by verifying the customer's identity.

Need for separate ministry for SMEs 

In a session titled "Small and Medium Enterprises (SMEs): Formalising and Internationalising", Former chairman of Next International, Peter Obi emphasised the importance of establishing a separate ministry dedicated to supporting SME entrepreneurs, as seen in China and Indonesia. 

He suggested that such ministries could provide intensive support for these activists.

Furthermore, he proposed that Commonwealth countries collaborate to enhance this sector by sharing technology and knowledge among themselves.

Garima Srivastava, senior trade specialist of the Institute of Export and International Trade, stressed the need for providing logistics support to SME entrepreneurs. She highlighted the role of the government in taking the initiative and recommended educating entrepreneurs on the steps involved in exporting their products.

Need for more investment in digital literacy

During the "Tech and Change: Commonwealth Innovation" session, Sami Ahmed, managing director of Startup Bangladesh, advocated for the distribution of affordable digital devices and digital literacy to the population, believing this would accelerate progress in the field of ICT. 

He also noted the relatively low presence of startups in the private sector in Bangladesh and suggested that increasing local investment would attract foreign investment. 

He further emphasised the importance of digitising all services within the country to facilitate online business registration and attract foreign investment.

Mike Torres, director of Elisha Telecom, emphasised the need for a stable, long-term investment policy to boost foreign direct investment (FDI). 

He cautioned against frequent policy changes, which can deter traders from investing due to uncertainty.

Investment proposals received for various sectors

Foreign Minister AK Abdul Momen spoke to journalists following the two-day conference. He highlighted the significant potential for increasing trade and investment with Commonwealth countries. 

He mentioned various investment proposals in sectors such as agriculture, contract farming, textiles, and agro-processing, emphasising that further details would be provided later. 

Momen also mentioned that many foreign companies had expressed interest in collaborating with Bangladeshi businessmen.

In response to a question, CWEIC Chairman Lord Marland praised Bangladesh as one of the world's great emerging markets and cited it as an example for other countries to follow.

He said, "You're a country (Bangladesh) that produces garments. Many of the countries here require garments. You're a country that's self-sufficient in food. The export of food is going to be very important from a Bangalore point of view, but also because of your workforce and the hard-working dynamic workforce, people are going to want to build factories out here and our building factories here. 

"And we've got people from Singapore and others who are looking actively at setting up the factory here to work. So it's a mixture of things and this is a networking event and it's proven to be very satisfactory for all this."

Bangladesh hosted the conference for the first time in collaboration with the Commonwealth Enterprise and Investment Council. Prime Minister Sheikh Hasina inaugurated the two-day Commonwealth Trade and Investment Forum on Wednesday.

Bida, the foreign ministry, and the ZI Foundation are partners of the conference. More than 300 international representatives including 13 ministers of Commonwealth countries participated in the two-day conference.

Togo's minister for the promotion of investment Rose Kayi Mivedor, Tuvalu Deputy Prime Minister Kitiona Tausi, Uganda Minister Ugandan Minister Francis Mibisa, Bangladesh Investment Development Authority (BIDA) Executive Chairman Lokman Hossain Miah, Bangladesh Economic Zones Authority (BEZA) Executive Chairman Shaikh Yusuf Harun, and City Bank Managing Director Mashrur Arefin also gave their perceptions in different sessions. 

Commonwealth of Nations, better known as the Commonwealth, is an international organization of 56 member states, most of which are former territories of the British Empire.