Dhaka Bank managing director eyes SME, retail lending through digital transformation

As Dhaka Bank marks its 31st anniversary, Managing Director Osman Ershad Faiz says the bank is repositioning itself from an institution focused on corporate lending to a technology-driven, inclusive bank with a stronger emphasis on SME and retail lending.

In an interview with The Business Standard staff correspondent Sakhawat Prince, he outlined the bank's strategic priorities, digital transformation agenda, and outlook for Bangladesh's banking sector.

What is your vision for Dhaka Bank over the next three years?

Our goal is to transform Dhaka Bank into one of the country's leading private banks by improving return on equity, credit quality, capital efficiency and customer experience while maintaining the highest standards of governance and transparency.

We believe the future of banking lies not only in large corporate lending but also in SMEs and retail banking, which are key drivers of Bangladesh's economy.

Through technology, sound governance and customer-focused services, we aim to build a modern, sustainable and inclusive financial institution that Bangladesh can be proud of.

How is digital transformation changing the customer experience?

We see digital transformation as a continuous process rather than a one-time initiative. Our e-Rin platform already enables instant credit decisions and loan disbursement within minutes without human intervention.

We are also using artificial intelligence and machine learning to assess borrowers using alternative data such as mobile usage patterns, transaction history, and cash flow, allowing us to reach customers who are often excluded by traditional credit assessment methods.

We are strengthening our IT capabilities while expanding partnerships with fintech companies, telecom operators, and mobile financial service providers.

Digital lending, mobile app-based banking, and digital onboarding are central to our strategy to make banking more accessible and to bring financially excluded people into the formal financial system.

You have said the bank has significant "headroom" for growth. What does that mean?

Headroom refers to the gap between our current performance and that of the country's top-performing private banks.

Our return on equity increased from 5.71% to 11.62% in 2025, but leading banks continue to generate stronger returns with similar levels of capital.

We already have a strong asset base and network. The next step is to improve revenue mix through higher-margin businesses while increasing operational efficiency.

How are you maintaining credit quality during a challenging period for the banking sector?

Credit discipline remains one of our top priorities. Our credit approval process is fully independent of relationship management and board influence. We also have specialized recovery teams managing different stages of loan delinquency.

In 2025, we voluntarily adopted stricter loan classification standards ahead of regulatory requirements to ensure our balance sheet reflects the true financial health of the bank.

What are your main strategic priorities?

First, we aim to preserve our credit culture during a period of sector-wide stress. We reduced classified loans by 27% in 2025 and will continue to be selective in lending.

Second, we are integrating our digital and physical banking channels to deliver a seamless customer experience.

Third, we are building a stronger leadership pipeline with greater accountability.

Finally, we remain committed to complete transparency in our communication with regulators and stakeholders.

How do you assess the non-performing loan situation in Bangladesh?

The NPL crisis is one of the banking sector's most critical challenges. The industry's NPL ratio reached 35.73% in September 2025, among the highest globally.

Addressing this requires structural reforms, including the adoption of IFRS 9 Expected Credit Loss models, the establishment of a dedicated Asset Management Company for NPL resolution, stronger central bank independence, and full interoperability across mobile financial services.

Why is the bank placing greater emphasis on women-led enterprises?

This is driven by commercial logic rather than social responsibility alone. Many women entrepreneurs remain outside the formal credit system because they lack traditional collateral.

By assessing repayment capacity through cash flow and transaction behavior instead of property ownership, we have identified a customer segment with strong repayment performance. This significantly expands our addressable market, particularly in sectors such as agricultural processing and garments.

Which sectors will drive Bangladesh's next phase of growth?

We see three key sectors.

The pharmaceutical sector continues to grow strongly while competing on quality. Information technology benefits from Bangladesh's young and digitally skilled workforce. Renewable energy will play an increasingly important role in ensuring energy security.

These industries are resilient because they are less dependent on trade preferences as Bangladesh prepares for LDC graduation.

How do you view competition from fintechs and digital financial service providers?

We see fintechs as both competitors and partners. Our approach is based on partnership in distribution and competition in credit.

Fintechs are strong in customer experience and high-frequency transactions, while banks retain advantages in credit assessment and balance sheet strength.

We are building partnerships with platforms such as bKash and Nagad to expand our reach while maintaining our expertise in credit risk management.

The interoperability introduced through the NPSB framework has significantly improved connectivity between MFS providers and banks.

We are also investing in AI-driven credit assessment to strengthen our position in these markets. Ultimately, success will come from integrating the strengths of both banking and fintech models.

How does AI support SME lending?

AI and machine learning are transforming SME lending by shifting from collateral-based decisions to data-driven assessments.

We analyse alternative data such as mobile financial service transaction histories, trade payables, and mobile usage patterns to evaluate creditworthiness, enabling us to serve borrowers with limited formal credit histories, particularly women-led businesses.

Our e-Rin platform demonstrates this approach by enabling automated assessment and disbursement without human intervention.

One of our strategic goals is to reduce SME loan processing time from several days to less than one hour.

AI also enables sector-specific risk analysis, including for IT businesses, by evaluating contracts and intellectual property alongside conventional financial data. This allows us to expand SME lending while maintaining strong credit quality.

What prompted your return to Bangladesh after three decades in international banking?

My return was driven by the visible gap between the potential of Bangladesh's private banking sector and its current performance.

Having spent decades building banking operations across Asia, I saw that the timing was right for structural reform in Bangladesh's financial sector.

What specifically attracted me to Dhaka Bank was its strong credit discipline. In 2025, the bank maintained an NPL ratio of 3.77%, significantly better than the industry average of 35.73%.

This reflects institutional discipline that I wanted to build upon. On a personal level, contributing to Bangladesh's economic transformation and playing a role in the development of its financial sector was a responsibility I was not prepared to turn down.