Prudent Lending Keeps Pubali Bank Strong: Mohammad Ali

Mohammad Ali is the Managing Director of Pubali Bank PLC.  In an exclusive interview with The Daily Observer at Pubali Bank’s head office in the capital’s Motijheel, he spoke about the current state of the banking sector, non-performing loans (NPLs), loan management, technology-driven banking services, remittance, and future plans of Pubali Bank. The interview was taken by Jibon Islam, Senior Correspondent of The Daily Observer.  The excerpt of the interview is given below:

Pubali Bank Managing Director Mohammad Ali claimed that despite the banking sector going through a period of stress following recent political and macroeconomic shocks, the bank remains in a strong and favourable position due to its prudent lending policy, independent corporate governance and clearly defined business strategy.
Describing the current situation in the banking sector as a period of “stress” rather than instability, Mohammad Ali said businesses had been affected by several major shocks in recent years.

“The dollar exchange rate has risen from around Tk81 to Tk120, while the Covid-19 pandemic, the Russia-Ukraine war and instability in the Middle East have adversely affected businesses,” he said.

He said the political change in August 2024 and the subsequent siphoning of money out of the country had also affected the banking sector. According to him, Pubali Bank followed a different strategic path from the beginning.

“During the previous government, Pubali Bank did not provide loans to politically exposed persons or large business groups that had been involved in major banking scams,” he said. “As a result, Pubali Bank is in a much safer and stronger position compared with many other banks.”

Regarding non-performing loans (NPLs), Mohammad Ali said Pubali Bank’s NPL ratio stood at 2.20 per cent at the end of December 2025, which has now increased to 2.40 per cent. He said the classification had been determined in line with international standards.

The bank is providing affected borrowers with opportunities to recover through policy support from Bangladesh Bank, special incentives, special exit facilities, and loan rescheduling and restructuring, he said.
“We hold taskforce meetings every month and encourage and monitor customers so that they regularly pay their instalments,” he said. To strengthen oversight and address operational shortcomings, the bank has appointed an experienced mentor for each region, he added.

Mohammad Ali said Pubali Bank has a loan portfolio of around Tk80,000 crore. “Every year, we need to provide a significant amount of new loans to maintain our existing loan portfolio and achieve growth,” he said.

Because of the maturity of short-term loans and the bank’s target of achieving annual growth of 10-15 per cent, the bank needs to make up for a gap of around Tk28,000 crore each year, he explained. “As a result, the bank needs to sanction at least Tk40,000 crore in new loans annually. On average, we process around Tk800 crore in new loans every week,” he said.

To prevent newly sanctioned loans from becoming classified in the future, Pubali Bank follows a three-tier loan selection process, he said. At the first stage, branch managers and representatives directly visit customers and their businesses for an initial assessment.

At the second stage, representatives of regional offices visit customers and hold direct discussions where necessary. At the third stage, the head office conducts the final filtering and risk assessment before approving the loan.

“The most important factor is that corporate governance is ensured at Pubali Bank, allowing our officials to work independently,” Mohammad Ali said. “As a result, we can onboard good customers without undue influence and keep the NPL ratio at a minimum.”

Asked about the impact of the ongoing gas and electricity crisis, he said no customer had so far officially entered the classified loan category due to the energy shortage. “Generally, a customer is classified after three to four consecutive instalments remain unpaid. Many customers also have some savings of their own, which is helping them manage the situation,” he said.
However, some industrial enterprises in the Narsingdi and Narayanganj regions are facing energy shortages. “We hope the crisis will be temporary as the government has already taken initiatives in this regard,” he said.

Considering the situation, Pubali Bank is planning to provide temporary salary support or special financial assistance for one to three months to affected industrial enterprises so that they do not fall into the classified loan category, he added.

To reduce risk, Pubali Bank is focusing more on SME, retail and individual loans rather than concentrating on very large corporate loans, Mohammad Ali said. “If a single large loan of Tk25,000 crore or Tk30,000 crore becomes classified, it can bring down an entire bank,” he said.

“In contrast, Pubali Bank generally keeps its maximum loan exposure within Tk400 crore to Tk500 crore.” A diversified loan portfolio helps maintain the bank’s capital adequacy, while the failure of a single loan does not create a major negative impact on the bank, he explained. Mohammad Ali said Pubali Bank has established itself as one of the leading private-sector banks in technology-based banking services. 

“Pubali Bank is currently number one in Bangladesh in terms of Bangla QR deployment,” he claimed. The bank has so far distributed Bangla QR facilities among around 435,000 merchants, which he said was comparable to the scale of mobile financial services giant bKash.

To support the government’s Cashless Bangladesh initiative, the bank has conducted around 200 to 400 promotional campaigns across the country, he said. The bank’s mobile application, PI Banking, is completely free for transactions to encourage customers to adopt cashless payments.

“We expect transaction volume through PI Banking to exceed Tk2 lakh crore this year, representing more than 100 per cent growth compared with the previous year,” Mohammad Ali said. He said Pubali Bank has also decided to make Bangla QR transaction fees completely free from October 1.

The bank is keeping POS terminal fees at a minimum, while separate applications for offshore banking and corporate customers are under development. The bank is also in the leading position in TakaPay cards, debit cards and POS terminal technology, he said.

Mohammad Ali said Pubali Bank has consistently remained among the country’s Top 10 banks in remittance collection and regularly receives NRB Branding Awards. Besides government and banking incentives, the bank offers additional gifts such as mugs, plates, bowls and glasses to encourage women from rural and marginalised families who come to collect remittances, he said.

“API connections with international banks and money transfer agencies have been completed. As a result, money sent from abroad is credited to customers’ accounts instantly,” he said. The bank also has agreements with major MFS providers, including bKash and Nagad, enabling remittances to reach customers’ mobile wallets easily. The bank has strengthened overseas marketing through brochures, improved services and participation in international meetings, he said.

Established in 1959, Pubali Bank PLC is one of Bangladesh’s oldest domestic commercial banks and has entered its 67th year of operation. Explaining the bank’s position in key financial indicators, Mohammad Ali said Pubali Bank ranks second after Islami Bank in terms of deposits.

In terms of operating profit, he said the bank has maintained a strong position after BRAC Bank and City Bank. “Our main goal is to remain among the top one or two banks in terms of customer service and all key parameters of our financial structure,” he said.