Sonali Bank eyes cashless economy, single-digit bad loans

State-owned Sonali Bank PLC is stepping up its digital transformation drive, aiming to accelerate Bangladesh's transition towards a cashless economy by rapidly expanding QR-based transactions, strengthening digital banking services and sharply reducing non-performing loans (NPLs).

In an exclusive interview with The Daily Observer, Sonali Bank Managing Director and Chief Executive Officer Md Shawkat Ali Khan said the country's largest state-owned commercial bank is spearheading the rollout of the Bangla QR Code, describing it as "a revolution" in Bangladesh's digital payment landscape.

"We are playing a leading role in introducing the Bangla QR Code, which is transforming the nation's journey towards a cashless society," he said.

The bank has already opened nearly 60,000 merchant accounts under the Bangla QR platform and has instructed every branch to enrol at least 100 new merchants each month. It also plans to increase the number of QR users from 1.4 million to 1.5 million over the next year.

Khan said digital banking has become significantly easier, faster and more cost-effective through the bank's proprietary Sonali e-Wallet, enabling customers to open accounts and carry out almost all banking transactions from home.

Sonali Bank currently serves more than 20 million digital customers, with further expansion planned as demand for digital financial services continues to grow.

Alongside its digital push, the bank is focusing on expanding business operations, improving customer services, recovering defaulted loans, increasing remittance inflows, strengthening foreign trade financing and positioning itself as a leader in digital banking.

Khan said the bank has made notable progress in reducing its stock of non-performing loans and has assigned recovery targets to every branch manager to sustain the momentum.

"We aim to reduce the NPL ratio from 15 per cent to 12 per cent this year and bring it down to single digits next year," he said.
To prevent fresh defaults, Sonali Bank has strengthened borrower screening before loan approval and introduced close post-disbursement monitoring to ensure funds are used for their intended purposes.

Responding to a question, Khan said no new borrowers had defaulted because of the country's recent gas and electricity shortages. 

However, delayed utility connections had previously left many industrial units idle, making it difficult for some businesses to restart operations and service their loans.

Khan said Sonali Bank continues to play a pivotal role in financing major national infrastructure projects.

The bank is handling foreign transactions and facilitating machinery imports for several strategic projects, including the Rooppur Nuclear Power Plant, reaffirming its position as a key partner in Bangladesh's development agenda.

The Managing Director said the bank is working to ensure remittances sent by expatriate Bangladeshis reach beneficiaries in the shortest possible time.

To strengthen overseas remittance channels, Sonali Bank is conducting market surveys in several countries and plans to establish new exchange houses to expand its global footprint.

Highlighting the bank's recent performance, Khan said Sonali Bank has undergone a remarkable financial turnaround since he assumed office 20 months ago.

During this period, the bank posted an operating profit of Tk 8,000 crore�"the highest in its history�"while eliminating long-standing capital and provisioning shortfalls that had weighed on its balance sheet for years.

"We have also reduced the classified loan ratio from 20 per cent to 15 per cent, while strengthening the bank's capital base and overall financial health," he said.

Looking ahead, Khan expressed confidence that the bank would further increase its capital surplus, continue lowering default loans and eliminate loss-making branches altogether.

"By maintaining our current momentum, Sonali Bank's financial foundation will become even stronger, enabling us to provide better services and make a greater contribution to Bangladesh's economic growth," he added.