BSS-29 Experts for good governance to cut risk in banking industry

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BSS-29

BANKING-RISK

Experts for good governance to cut risk in banking industry

DHAKA, Nov 25, 2018 (BSS) – Experts at a seminar in the city today opined that good governance is essential in the banking industry for making good profit by reducing risks and challenges.

They called for empowering the branches of banks to reduce the pressure on the head offices and avoid disorders in the banking industry.

The speakers came up with the views at the seminar on ‘Centralized and Decentralized Banking: A Study of Risk-Return Profile of Banks’ at the BIBM auditorium here.

Bangladesh Institute of Bank Management (BIBM) organised the seminar where a paper on the ‘Government Spending and Socio-Economic Development in Namibia’ was presented.

Bangladesh Bank (BB) former deputy governor and advisor of the BB’s Banking Reform SK Sur Chowdhury attended the seminar as the chief guest while former Dhaka University Economic Department professor Dr Barkat-E-Khoda, former Sonali Bank managing director SA Chowdhury and managing director of the Dutch Bangla Bank Limited Abul Kashem Chowdhury, among others, were present.

SK Sur said a bank’s cost control efficiency and higher profitability may be ensured with less manpower in a centralized system since the major decisions are taken at the top level.

“On the other hand, fastest credit decisions can be taken in a decentralized system due to the scope of avoiding long and bureaucratic chain of command,” he added.

He said the customer satisfaction level is high in decentralized system since it saves the time of both bank and its customers.

“Decentralization has a positive effect on banks’ resilience. It is evident that business cycle synchronization between centralization and the decentralization in which a bank operates has a negative impact on risk,” he added.

SK Sur said the centralized and decentralized banks mitigate the negative effect of synchronization and reinforce the positive effect of diversification on bank’s resilience.

These positive effects are reinforced during the transformation times, which were specially felt in advanced economies, he added.

SA Chowdhury said state-owned banks are providing their services through decentralization, but research is essential in this regard for finding an easy process for all banks to deliver their services smoothly.

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