The entire banking industry of the world is confronting with new challenges due to coronavirus pandemic. Not only the banks but also most of the businesses are now thinking new way of doing business. It was not predictable at all that how deeply corona virus affect the human life and business life of the world. The banking sector of Bangladesh has already started to take the bitter test of the pandemic. It’s slowing down the banking business and bankers are facing challenges in every step.

Certainly, there is health risk for both the bankers and customers in rendering day to day banking activities. Most of the customers are avoiding visiting to the banks for taking services, if they have any alternative options. On the other hand, bankers cannot visit to their clients’ office, shop or residence due to health risk. As a result, banks are in deep challenges of debt recovery, deposit collection and new or existing business development.

Debt recovery, deposit collection and business development are main and regular jobs of a Bank. To run the banking business smoothly, regular recovery of debts, collection of funds for deposit and booking new businesses are mandatory. Earlier the borrower visited to the banks to repay the borrowing money or the bankers visit to the borrowers’ place for recovering the money. Depositors freely visited to the banks for depositing their money and bankers also visited to the depositors’ place for marketing purpose.

Moreover, in a normal business environment it is very easy for a banker to assess a borrowing client for lending money. But now bankers have to rethink the process and style of banking in a new way as environment has been changed rapidly due to the pandemic. Bankers are now experiencing very low recovery rate in its banking history, slower down the deposit collection with trend of withdrawal of individual and SME deposits as well as risk in business development.

But, there is no option to avoid rather bankers has to deal with the challenges so that banking industry remains in good shape. The best way to deal with the challenges is to find out the problems, generate different alternative solutions of the problems and choose the best options that will serve the purpose and solve the problems.

Firstly, debt recovery may be disrupted for many reasons like borrowers may not feels safe to visit to the bank, income of the borrower may reduce due to recession, borrower or his family members may get sick, borrower may take the chance of pandemic and so delaying repayment intentionally. In this situation, bankers have to keep continuous communication with the borrower over telephone, social media or through his representatives. Rather giving pressure, bankers may softly remind the borrower regarding his dues and also let him know the demerits of delaying payment.

If the borrower delaying payment for safety purpose only, give him alternative options of payment which is convenient for both the banker and the borrower. Some banks haves already introduce payment system through different MFS (Mobile Financial Services). Internet Banking can be used for repayment of debt from home. If borrower fails to repay the dues for reduction of his income, bankers may restructure or reschedule his loan based on his present income. Legal action may take against the willful defaulters under the prevailing rules and regulations. Central bank of Bangladesh has already issued circular for not change the classification status of the borrower till 30th September, 2020 in spite of delay in repayments.

But due to this circular, some borrowers willingly delay in repayment despite having repayment capacity. Central Bank may also introduce policy like discount offer for the borrowers who will repay the overdue payments at a time during the pandemic period to accelerate the repayment and impose penal charge for the borrowers who are willingly stop repayment without any valid reasons. Central Bank may allow reschedule/ restructure in easy terms for the borrower who are really affected by the corona pandemic. The government has to make strict laws of recovery of debts to discourage the willful defaulters and wicked borrowers otherwise the good borrower as well as real sufferer defaulters will be deprived.

Secondly, like debt recovery, deposit collection is also a continuous process and regular job of a Bank. Deposit is called the life blood of a Bank. The loanable fund of a Bank comes from the deposit. The more deposit will procure the more a bank can invest. But, deposit collection may be shrinking for many reasons during this pandemic. Health risk is a common cause in this period for which depositors may suspend visiting Bank.

Besides, due to reduction of income of many people, individual deposit growth may be declined. Rather, there is a chance of withdrawal of existing deposit for the same reasons. Bank may introduce new lucrative products to attract the prospective borrowers and provide service in a shortest possible time. Some banks have already introduced account open facility in the digital platform where customers can open bank account from home.

Bank may allow secured digital platform for the customer where a customer self can open all kinds of account and transact using online banking. Besides, bank can contract with different MFS to allow deposit in any bank account using MFS. Besides, Bank may create a safe environment for the customer by adopting all kinds of safety measure as per government. The bank official may develop personal business relation with the customer which is very fruitful for procurement of individual and institutional deposits.

Finally, both the debt recovery and deposit collection directly affect the business development. If both the debt recovery and deposit collection tends to negative, then banks ability to invest further will shrink. Besides, bank should be more careful in new investment. Excessive analysis of the prospective borrower’s capacity, net worth, income source should be done to make the investment safe. To safeguard the interest of the depositors Bank should not go for unsecured and long term investment in this time. Bank may introduce life insurance for the borrowers in collaboration with different life insurance company to safe the investment and relief the borrower in times of his death. Bank also should give due monitoring system for the existing investment so that Bank’s asset may not deteriorate.

The corona pandemic not only causes the risk of life but also economic recession. And will affect the banking sector directly. Conventional banking system may not be worked out so long to mitigate the challenges ahead to us. The Bankers have to be ready to take the challenges and create their mentality to overcome the challenges from their past experience, intuition as well as applying innovative ideas.
The writer is a banker &
freelance contributor