Nepal based BFIN organized an online conference on August 14, 2020. Excerpts from the keynote by Dr Shah Md Ahasan Habib, Director, Bangladesh Institute of Bank Management:
There are extra ordinary expectations from banks during the covid scenario. There are also huge resource limitations. There is also a policy crisis as all policies are not working effectively.
Dr Shah Md Ahasan Habib
Concerns: Corporate governance must adjust as time evolves. Bank’s boards are expected to change their roles during crises, as seen in the past. What are the areas of banking operations where management need policy guidance? People, the biggest asset of banks, are fearing job losses. There are fears of erosion of customer confidence. Banks have concerns on liquidity and capital insolvency. NPL might be a critical challenge in coming days. Money laundering and information technology security frauds are showing increasing trends by taking advantage of the current situation. Also, there is potential challenge of misuse of stimulus packages being implemented through banking system.
Must do: Focus should be on business continuity and igniting long term growth. One possible way to improve monitoring is to create one or more committees and to create leadership networks. Banks must have an internal strategy for economic stimulus so that clients and the bank itself must benefit. We may need workplace transformation and complete digitalization. Increasing compliance cost has put pressure on banks’ profitability. However, failure to comply may be even costlier. Bank should restrain from excessive profits in the short term for the sake of long term social and economic growth.
Upgrading Risk Management: For risk management, it is time for installing factual risk management systems. Banks need to upgrade to newer forms of risk. An extra ordinary information system and network is required, which may not be the need in the normal times. Trust from business, customers and community may be at risk.
