Tarique Afzal, president and managing director of AB Bank, has core competencies in: creating new business streams, operational efficiency, performance improvement, and regulatory relationships. With a 34-year career in the banking profession – as well as experience in working for foreign commercial banks and a ratings agency – he took charge of the scam-hit bank in 2018 and raised it to a better position within a short time.
Last year, the country's first private bank performed very well in almost all indicators. In a recent interview with The Business Standard, Tarique talked about the bank's strategies to recover bad loans and challenges to that. He also provided an account of the bank's present approach to issuing loans and future targets to bring sustainability to it. The interview was conducted by Shafayat Hossain.
The Business Standard: Last year, AB Bank achieved tremendous success by numerous indicators. What was the present management's role behind this?
Tarique Afzal: I was appointed as the bank's managing director in December 2018, and in July 2019, I took full charge. We, the management team, prioritised compliance issues. Our primary focus was to recover bad loans.
In December 2018, AB Bank's defaulted loans were Tk7,900 crore – while loans and deposits were Tk24,000 crore each. We set our target to cut defaulted loans by 50 percent, by 2019, and we targeted the actual recovery of bad loans alongside offering special rescheduling facilities.
When we began the recovery process, we observed that loans had not properly been monitored in the previous years. In some cases the media played a negative role too – with repeated news stories about the bank's money laundering. Here I must say the bank's defaulted loans, except Tk200 crore [of laundered money], were within the local market. The Anti-Corruption Commission has been investigating that laundered amount while the bank has also filed cases against it. The then-bank management had not taken action against defaulted loans on the domestic market.
To recover the money, I preferred going to the money loan court later because it was time-consuming. So, I started filing cases, under the Negotiable Instrument Act, against defaulters whose [guaranteed] cheques bounced. Then, the court issued arrest warrants against defaulters, including many influential ones, and led drives to catch them. Some defaulters were held while some managed to escape. However, it yielded good results because many returned the bank's money they had defaulted on. As a result, AB Bank's defaulted loans reduced to 14 percent from 33 percent. This is an exception in the sector.
The Business Standard: What challenges did you face in recovering the money?
Tarique Afzal: We received many threats from defaulters but we did not give in. We shared this with the central bank and law enforcement agencies. They helped us in many ways. Ultimately, we succeeded in recovering money. We will also be able to get back a good amount as our process is ongoing.
The Business Standard: What about your new loans? Have they turned into bad loans?
Tarique Afzal: For the last 10-12 months, we have not lent any fresh money. We have stopped issuing corporate loans and have focused on retail and small and medium enterprise (SME) loans.
The Business Standard: You mentioned the media's negative role. Can you elaborate on this?
Tarique Afzal: The case against former BNP minister and owner of Citycell (Pacific Telecom), Morshed Khan, was highly political. The way the media ran stories ultimately harmed the bank. It received injuries to its reputation, and Citycell, too, had to cut the jobs of its employees.
Both companies had contributed greatly to generating employment. The government later realised this and backtracked from its earlier stance on the issue.
The Business Standard: What is the recent status of the Citycell loan?
Tarique Afzal: Morshed Khan is now a regular customer of this bank, but his company is no longer in operation. Now we have no problems regarding this customer.
The Business Standard: What are your plans for the upcoming days?
Tarique Afzal: In 2019, we recovered money with hard work. Now we are working on bringing sustainability to the bank. This year, we are strengthening our activities to retrieve defaulted loans. We are trying to bring down the default loan percentage to a single digit by June.
The Business Standard: How is this possible? What strategy will you use?
Tarique Afzal: AB Bank is now 37. Many borrowers have taken money from it. Among them, some have turned into defaulters. We have prepared their list. If we can recover 50 percent of the money from the pending cases, our default loan percentage will come down below 10 percent by 2020. Our legal department is very efficient and active.
The Business Standard: Amid a reputation crisis, you managed to collect Tk4,000 crore of fresh deposits last year. How was that possible?
Tarique Afzal: In spite of various problems, we never failed to pay back depositors' money – which helped to restore their trust in us. That is why we received big deposits and our earnings have increased significantly. Before September last year, we brought down our advance and deposit ratio to 85 percent from 100 percent in December 2018. You know a bank cannot lend more than 85 percent of its deposits.
The Business Standard: Do you plan to expand your banking services?
Tarique Afzal: Of course. We are emphasising agent banking to extend services to the people's doorsteps. We have nearly 100 agent banking outlets countrywide. We want to increase the number to 1,000 by this year, because agent banking is more effective for rural people. We will also keep focusing on retail, SMEs and woman entrepreneurs because the loan default rate among SMEs and woman entrepreneurs is comparatively low.