Dhaka Bank ramping up digital drive with boost in retail, SME lending

Marking its 30th anniversary, Dhaka Bank aims to be a role model for financial inclusion by combining good governance, risk management, and modern technology. It plans to rank among the top five banks and shift 50% of its loan portfolio to SME and microfinance. Despite a sector-wide high default rate, the bank has kept its non-performing loans (NPLs) below 7%, said the bank's Managing Director, Sheikh Mohammad Maroof, in an interview with The Business Standard, where he also shared the bank's future plans.

Amid the country's economic challenges, how does Dhaka Bank sustain its stability?

Both the economy and the banking sector face tough times, impacting almost everyone. However, Dhaka Bank is free from a deposit crisis. Our 30 years of experience, strong governance, risk management, and customer trust have ensured our stability during this period.

In the past five months alone, we have collected Tk8,000 crore in fresh deposits. Nearly 750,000 new accounts have been opened through our online and various other platforms in this short period. This achievement reflects people's confidence in our brand and their trust in us.

Dhaka Bank is one of the few banks in Bangladesh that continues to operate with a good reputation even in adverse times.

With sector NPLs at 25%, how has your bank maintained its rate near 7%?

If we look at the last nine months, NPLs increased by about Tk2.2 lakh crore. Of this, 71% is concentrated in just 10 banks.

At the end of December 2024, our NPL was only 5.33%, though it rose slightly to nearly 7% by the end of March this year. This increase is partly due to new loan classification policies introduced by the Bangladesh Bank.

We have always invested based on client selection and risk management. We have never engaged in lending with loss-making or high-risk companies. Thanks to good governance, Dhaka Bank continues to operate steadily.

There is no direct interference from the board in our lending decisions. Our governance is very strong, which strengthens our risk management and client selection processes.

Has Dhaka Bank faced a liquidity crunch? Where do you see the bank in the next five years?

We have not faced any liquidity crisis. In fact, we are one of the banks providing support to other banks facing liquidity shortages. Our liquidity position is very strong, and our net growth is good. This has been possible because of people's trust and confidence in us. We work very carefully and selectively with new clients. 

In the next five years, I want to see Dhaka Bank among the top five banks in the country. We aim to achieve this through product offerings, customer experience, business capability, and profitability.

My plan is to structure the bank's portfolio so that at least 50% of our investments are in the retail and SME segments, with the remaining 50% in the corporate segment. This balance will strengthen our balance sheet and reduce business risk.

We want our bank to reach people in remote areas through digital platforms. In terms of financial inclusion, Dhaka Bank will be one of the leading banks in the country.

How is Dhaka Bank different from other banks in the eyes of customers?

Our products and customer outreach are timely and relevant. We've launched online and digital platforms in step with the times. Through features like instant account opening and nano DPS, we're reaching even remote areas.

Secondly, in its 30-year history, Dhaka Bank has never faced any major negative issues. As a second-generation bank, we've built a strong position. Our human resources, market presence, and product line are ahead of many other banks. These are the reasons customers trust us and see us as a distinctive bank.

How are you more customer-friendly than other banks when it comes to lending?

We operate through over 150 outlets across Bangladesh. Our loan products include loans for women entrepreneurs, startup loans, and special loans for rural and small entrepreneurs.

We don't just provide financial support—we also work on skill development and financial literacy. In rural areas, we organise sessions to educate people on business fundamentals, money management, and the importance of savings.

Currently, we're using digital channels for small and micro loans. Our goal is to digitally approve small loans starting from Tk10,000 up to Tk100,000. We are focused on making loan access faster and easier for customers. In the future, we plan to expand rapidly in this segment.

Given the current situation, how do you see investment prospects?

It's a challenging time. Private sector credit growth dropped to 7.5% as of April—the lowest in a decade—and real growth is negative when adjusted for inflation.

The economy is in a transitional phase, and investors are waiting. Once an elected government is in place, we expect economic momentum and foreign investment to pick up.

We're currently investing cautiously, sticking to familiar clients and sectors.

Despite lower GDP growth projections of 4–5%, Bangladesh has historically maintained over 6% growth, even crossing 7%. With political stability, the pace will return.

Foreign investors, including those from China, are already showing interest. I believe investment commitments made during recent summits will begin to materialise once a new elected government takes office, leading to real investment flows and economic recovery.

What's your view on the merger process for weak banks?

Mergers and acquisitions are common globally. They occur either as strategic mergers—where banks align in vision—or as rescue mergers for failing institutions.

In Bangladesh, mergers alone won't work. They must be backed by a proper strategy, strong governance, and capable management. Simply merging weak banks with strong ones without addressing core issues like capital shortfall, high NPLs, or poor liquidity may worsen the situation.

Look at Eastern Bank or City Bank—strong leadership and governance helped them succeed. Similarly, any merger must include reform and leadership at the weak institutions. Otherwise, injecting public funds without fixing fundamentals is like pouring water into sand.

What message do you have for your bank's customers?

I would like to sincerely thank our valued customers. Over the past 30 years, their trust and support have brought Dhaka Bank to where it is today.

Last year, we declared a 10% dividend for our shareholders, reflecting our consistency and financial stability.

To our customers, I want to say that we are working to build Dhaka Bank into a modern and forward-looking institution—one where all banking services, including loans, deposits, bill payments, trade finance, or corporate finance, are delivered quickly and efficiently.

We are ready to bring our services to even the most remote areas using cutting-edge technology. We are committed to providing even better and more transparent services in the future.