Thinking Loud

thinking loud

Right way to address 'concerns' over Islami Bank

Published : Monday, 25 February 2013 FE

Mamun Rashid

While there were rifts between the journalists from one private television channel and other union leaders over Sagar-Runi murder, I found many journalists working with other private ones quite happy with the development. The same thing happened when the 'boss' of yet another private channel was put to the corner. However, I am yet to come across any senior bank executive or any responsible businessman, who are happy with what is happening to the Islami Bank, Bangladesh during last few days. Be he or she a bank executive or a government official or a businessman or a business leader, all seem to be quite puzzled by what is happening to the banking industry and especially to the Islami Bank, Bangladesh. Even some of the central bank officials and seniors at the relevant ministry are found to be sceptical about the steps taken by the controlling agency to protect the banking sector.

Yes, since joining the 'banking' in the mid-eighties, I came to know that the Islami Bank Bangladesh was founded by a few who were 'close to Jamat-e- Islami' businessmen and leaders, who also had reportedly appointed a few former `Islami Chhatra Shibir' people as its executives. However, over the period of time, while working with few foreign banks at their correspondent banking or trade marketing department, we watched the Islami Bank emerging as the most noteworthy bank for its 'customer hand-holding' as well as 'solutions building' qualities. Be it M/s Azizul Haque or Lutfor Rahman Sarker or Kamaluddin Chowdhury or any of their successors at the Islami Bank, Bangladesh, everyone worked from 'dawn-to-dusk' to bring this bank to an otherwise enviable position, to make it a 'bank of choice' for most large, medium and small operators in apparel, pharmaceuticals, shipbuilding or energy sectors.

As a student and now a professor of 'Marketing' and, more importantly, having worked with three global banks at home and abroad for more than 25 years, I seldom get carried away with so-called 'best bank' or 'best employer' awards. However often I was intrigued by the way the Islami Bank help their 'problem clients' to make a turnaround and bring them 'back-to-track'. No other, I repeat, no other banks, including the foreign ones can claim to have performed at that level.

Islami Bank is the largest commercial bank in the country, making the largest amount of profit, handling almost 30 per cent of country's inward remittances alone, handling the highest external trade volume and also employing the largest number of people among private commercial banks. I once took my regional boss from Standard Chartered Bank to visit the 'busiest commercial bank branch' in the country -- the local office of the Islami Bank at Motijheel. My boss was totally bemused to see -- how the employees there were keeping their cool and wearing smile despite so much of challenges with international trade and that too until 9 pm in the evening'. Many large exporters have told me how Islami Bank had came forward to 'handhold' them, restructure their loans, increase their facilities and let them move forward. Many biggies in the apparel industry did tell me -- had there been no Islami Bank, they would have been already lost in the 'Bay of Bengal'. I went to Saudi Arabia many a times to market 'inward remittance' for my bank and was very envious to see 'how most of Bangladeshi expatriates were happily availing the services of the Islami Bank'. Believe you me -- most of the people there, had nothing to do with 'Jamat' or even 'interest-free banking'. All that mattered to them was 'customer service or service' at both ends.

Yes, Islami Bank was once or twice reprimanded or fined for breaching the `regulatory reporting' lines or threshold, the most publicized one being 'having an account of Bangla Bhai'. Not to defend anyone, many banks, I repeat, many banks were also reprimanded or fined for not following the 'suspicious transaction reporting (STR)' or 'Cash Transaction Reporting (CTR) or 'Know Your Client (KYC)' norms properly.

At frequent intervals, we at various foreign banks used to obtain 'reinforcing testimony' on various banks from the relevant regulatory unit, in order to review our 'credit exposure' or 'risk exposure' on our client banks including Islami Bank. In most cases, the regulators had very good words for Islami Bank' for the way it was being managed with the least possible percentage of classified loans, making contribution to inward remittance, standing firmly by the problem clients and taking large exposures on the right and growing segment of the economy. I heard AHM Mostafa Kamal MP, once saying - 'if Islami Bank didn't come forward, the holding of the ICC World Cup in Bangladesh would have been a tough task'.

Whatever, I have mentioned above, should in no way give 'waiver' to a 'culprit bank' if found engaged in activities subversive to the state or against national interest. But one needs to consider how many times, Bangladesh Bank could 'spot out' Islami Bank 'on the wrong foot'. Rather, the regulators were found 'shy of' rewarding the Islami Bank' for its performance with regard to the inward remittances, despite they have been routing year on year the highest volume of inward remittances, handling the highest volume of export trade and spending on corporate citizenship.

Bangladesh Bank with the help of US State Department, US Department of Justice, Financial Action Task Force (FATF) and FinCen(Financial Crimes Enforcement Network) have tightened their belt with regard to 'anti-money laundering' or 'anti-terrorist financing,' established a `Bangladesh Financial Intelligence Unit'(BFIU) and forced the banks to go for regular `self assessment' with regard to anti-money laundering compliance. Credit has to be given to the 'development partners' including the United States for having made it possible for Bangladesh to update a stricter 'anti-money laundering and terrorist financing' law in 2012. Hence, none of their audit or inspection team could find out 'Islami Bank' as being not compliant. Who should be blamed for this? I do not know the answer.

Following allegations about its being linked to Jamat-e-Islami, Islami Bank branches and ATM (automated teller machine) booths are being attacked. There are reports about 'run' on their deposits at some branches against the backdrop of demands for banning or nationalizing the Islami Bank. I don't have any objection to this, if the appropriate authority does so, based on proper findings and in compliance with the law of the land. But until that happens, we would expect our central bank to talk to the 'law enforcing agency or relevant ministry' to do their best to avoid 'attack on the bank's branches' and come forward to protect our banking industry. Law, irrespective of its domicile, has upheld the philosophy that none, an individual or an investigation, is guilty, unless and until he or she or it is proven guilty. While regulators are adequately empowered to run any investigation or reviews, any customer of the bank, small or big, any industrialist or a businessman has the right to know 'why all these are happening to their bank in need'.

We passed a very challenging time during 2007-08, when task force or armed forces officials, cracked down on our bank branches, in order to find out 'transaction details' for few 'deemed to be corrupt' businessmen or business houses. We could easily take coverage of the 'senior task force officials' or even the central bank in order to protect our clients or uphold the secrecy of customers and refrain the investigating officials from doing 'excesses'. It seems to me, all concerned personnel in our financial sector either have lost their senses or are getting carried away by what is happening around them new. If the situation continues like this, all our exercise with regard to an 'inclusive financial sector' or 'responsible financial sector management' will turn ineffective. May the Almighty help all such personnel to 'keep cool' and do what they are meant to do.

(Mamun Rashid is a former banker and economic analyst. He was the chief executive officer at the Citibank NA, Bangladesh E-mail:mrashid 1961@gmail.com)