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Key Achievements Throughout The Career

Influences In My Life

Bangladesh, once South Asia’s rising star, has been ostensibly unraveling for the past few years. Its economic miracle -- decades of breakneck growth fueled by garments, remittances, and grit -- has been buckling under a relentless onslaught of inflation, banking chaos, and political tremors. The question now is not whether Bangladesh can recover, it is whether it can survive a descent into potential material economic challenge.

Inflation has fluctuated around the 9% mark over the past two and a half years, a beast refusing to be tamed. Food prices, accounting for more than 45% of the Consumer Price Index (CPI), are the ringleader. Rice, the lifeblood of 170 million Bangladeshis, soared after 2024 floods ravaged paddies and export constraints choked supply. The central bank’s fix -- cranking the policy rate to 10% -- has seemingly been a futile gesture, like attempting to navigate through rough seas with a paddle boat. This is most likely not a demand-driven excess, but a supply-side shock.

The potential fallout is vicious. RMG workers in Dhaka, scraping by less than Tk14,000 monthly, stormed streets in late 2024 demanding 20% wage hikes as basic food costs spiraled. Businesses, margins razor-thin, hiked non-food prices to survive, cementing inflation at 8-9% through FY26 -- far above the government’s ambitious 6.5% target. Political unrest fuels sky-high expectations, while the risk of a significant Taka devaluation has grown materially due to the vulnerability of a more market-driven exchange rate system to external shocks.

Businesses under stress, job opportunities scarce

The private sector has been hemorrhaging. Smaller businesses are suffering since the political chaos that began in July last year. Hundreds of firms are gone, and unemployment is creeping up already (4.6% to an estimated 5%+). As usual, informal sectors are impacted the most. Jobs are unlikely to come back anytime soon. The government balance sheet and income statements are under stress due to multiple reasons including increasing debt and poor and decreasing revenue collection, and private firms are bunkering down. The entire banking system as we the plumbing of fund flow is under serious stress and most certainly not improving.

 The banking sector is most likely eroding an already stressed capital base in real time given general macroeconomic drivers since Q4 2024 -- super charged by exploding stress in the credit portfolios and growing at least 12% rate equivalent 90 day T-bill. Non-performing loans (NPLs) spiked to over 20% by December 2024, up from 9.9% a year prior. One of largest, a state bank, clocks NPLs near 25%, tied to poorly structured loan facilities with high-risk collateral. The Capital Adequacy Ratio (CAR) languishes at 6.86% -- far below the 10% minimum -- while stressed assets balloon to over Tk650,000 crore, and most likely over a third of all loans.

At least six banks teeter and capital adequacy largely ignored; if any of the large banks encounter solvency issues, a depositor trust could most certainly adversely impact the entire financial system. Bangladesh Bank’s plan to merge six troubled banks and transfer ownership to the government may protect public trust in the short term -- at the cost of further shrinking fiscal space.

Savers are also spooked -- deposit growth crawled to 8.21% in April 2025, with the average growth over the past 12 months hovering at just 7.93%, as cash fled to mattresses or was spent on essential items. Bangladesh Bank has been challenged to recalibrate without adequate visibility and capital firepower. Private credit’s flatlined at 7.57% growth, strangling businesses. 

Moody’s recent March 2025 downgrade of the banking sector to negative may further deter investors, drive up transaction costs, and raise LC expenses, straining businesses and the economy.

Bangladesh’s long-compromised legal system has been further turbocharging the situation, choking commerce with corruption and a flood of false, baseless cases devoid of due process. The legal system has been a cesspit for decades -- 4.5 million pending cases at the end of 2024, up 5.13% from 2023 -- where justice is sold to the highest bidder. Anyone with money and bad intent ,including a defaulting client, can short circuit the legal system. Meanwhile, fabricated lawsuits and corrupt regulators continue to paralyze businesses: In 2024, many businesses faced a trumped-up charge financed by a rival and faced serious reputational risk without evidence or a proper hearing. Due process has largely been a myth in Bangladesh; as politically wired cronies -- regardless of who is in charge, tied to billions in bad loans -- evade accountability with greased palms.

such lawlessness screws foreign investors too, due to glaring lack of enforceability of contract, no real protection for anti-competitive or illegal business practices, flouting international law and Bangladesh’s 1980 investment treaty with the United States. The treaty promises fair treatment and dispute resolution, but Bangladesh’s judicial farce delivers neither, inviting arbitration at the World Bank’s ICSID.

A 2024 Transparency International survey found that 68% of businesses paid bribes to navigate disputes, repelling foreign capital. Investors flee, confidence implodes, and the economy bleeds -- a legal system not just broken, but a weapon of economic self-destruction and a disgrace. This increasingly adverse trend will most likely have a long-term adverse impact on not only potential FDI but also send shockwaves and glaring warnings across any potential FDI investments including from the United States.

Eroding government income and foreign aid

NBR tax collection remained sluggish, rising just 3.96% in the first 10 months of FY25 -- 37.6% below the target. VAT and income tax collection growth could not hold the historical momentum as families ditch TVs for rice, businesses barely surviving. Customs and excise bleed too, with squeezed imports. Fixed costs eat over 60% of the budget, leaving no wiggle room, reflected in the proposed budget of FY26. The inevitable austerity led to a cut in the development budget by TK35,000cr while the operating budget increased by Tk28,000cr. Hence, the mega-projects are unlikely to be finished and at the same time liabilities will grow and cannot be cancelled easily.

Foreign aid is also adversely impacted -- commitments down 43.99%, disbursements off 17.84% -- spooked by political turmoil. The government is putting even more stress on banks instead, choking private credit further. It's a vicious cycle -- less cash, more debt, weaker banks, no growth.

Exports and remittances prop reserves at $20.6 billion, holding the local currency at Tk123 per $1. Import restrictions are still in place and FY25’s $4.3 billion debt bill looms. Unsurprisingly, FDI headlines also continue to disappoint. While economic chaos has kept the five-year average inflow at $1.5 billion, political instability most certainly has triggered a further 71% drop in Q1 FY25. A flexible exchange rate could tank the Taka by 15-20% -- Tk150/$1 by late 2025, petrol at Tk200 per litre. Inflation could hit 12%, as reserves plummet below $15 billion due to any internal or external shocks including if overseas jobs dry up.

The best case is most likely a hallucination: Food subsidies, fiscal discipline, and remittance luck limp growth to 2% by 2026, inflation at 9%. But politics is highly unpredictable and volatile -- July 2024 proved it -- and global jolts like $100/barrel oil at sustained level could materially destabilize the economy. The worst case would be if the government is unable to act, inflation tops 12%, the Taka craters, a bank fails, and riots erupt. Growth stalls at zero, unemployment hits 7%, and stressed assets swell to Tk800,000cr.

Yet, Bangladesh has defied odds before. Its RMG sector has weathered global slumps, and its people rebuilt after cyclones. The interim government must act now -- fast-tracking food production with real subsidies, merging failing banks with ruthless precision, securing an IMF lifeline and attracting strategic foreign investors for a sustainable and a robust economy that benefits hard working citizens. The administration also needs to stop living in denial and empower qualified leaders in the right seats -- doing so could claw back from the edge. Remittances, a $24 billion anchor -- which saw successive record-breaking numbers in February, March, and May, and a young, restless workforce -- give us reason to hope still.

This storm is a leviathan, and 2025 could drown the dreams, but if history is any guide, Bangladesh’s resilience cannot be underestimated for a potential brighter future.

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The glimmer of hope

Mike Tyson’s claim, “Everyone has a plan until they get punched in the mouth,” captures a compelling truth about strategy and resilience.

It highlights that no matter how well-prepared or thought-out a plan may be, unforeseen challenges can completely disrupt it. In the heat of the moment—whether in the boxing ring, life or economic challenges—the ability to adapt, respond to adversity, and stay focused is often more important than the overall plan itself. Tyson’s quote highlights the unpredictable nature of challenges and the necessity of being prepared for the unexpected.

The current financial crisis in Bangladesh is undeniably severe, with the banking system facing a capital shortfall estimated between $30 and $50 billion, with classified and distressed assets accounting for over 30 percent and growing, given the current economic uncertainties including the cost of funding. Those who have lived through significant financial crises like the SNL crisis of the early 1990s, the 1997 Asian financial crisis, the Latin American Crisis, and the 2008 global financial collapse understand that these situations require not only substantial capital infusions but also highly coordinated, robust policy interventions. The path to resolving these challenges is full of execution risks, with limited room for error.

Bangladesh’s crisis is more complex and multi-dimensional than previous ones that we have observed. Like a patient in the ICU facing multiple organ failures, the banking system may soon be on life support if it isn’t already. Stabilising the situation requires not just experienced technocrats and orthodox thinking, but a team of highly skilled, experienced professionals with execution skills who understand the local reality, the dynamic interrelationships and consequences triggered by each policy decision, and uncontrollable factors. We must prioritise which parts of the economy can be saved immediately and which areas might require short-term sacrifices to ensure long-term survival. Attempting to address all these conflicting challenges simultaneously with limited capital will likely lead to failure.

For those in the finance or investment industry, there is no space for pretence. Performance is evaluated daily through “mark to market,” a real-time measurement of financial standings that can, at times, send shockwaves through the entire financial system at times of market stress. The same level of transparency and discipline is essential in managing this crisis.

Bangladesh’s economic challenges must be clearly articulated with measurable data, and the solutions must be executed with precision and realistic planning. A measurable, adaptable strategy is needed, with room for adjustment as the situation evolves. Conflicting priorities—such as stabilising the banking system while managing rampant real inflation and dwindling reserves—make the situation even more complex. The cost of inaction or superficial measures could be disastrous, potentially leading to a prolonged economic depression that would inflict serious pain across the economy and the population, including consequential austerity measures that we want to minimise or avoid.

In times of financial crisis, events can spiral out quickly at lightning speed. Therefore, swift, timely action is vital once the objectives, trade-offs, and uncertainties are crystallised. A key realisation is that without substantial and necessary capital injection, the problems in the banking system cannot be resolved. When capital is eroded, financial engineering alone cannot remedy the situation—restoring capital is the priority. Beyond the IMF bailout, Bangladesh should explore alternative funding options that may be unpopular, such as selling strategic assets to partners, issuing sovereign bonds, securitising real receivables (similar to municipal bonds and asset-backed securities), immediate and clear incentives for FDI, or a combination of these alternative approaches.

While controlling inflation is critical, it must be recognised that without timely access to sufficient financing options, there may be no choice but to resort to printing money. Once the constraints, trade-offs, and limitations are accepted, the decision-making process becomes clearer, allowing for more informed choices and consequences about the difficult path ahead. The plan must survive despite the pieces that are broken that we want to fix or compromise.

All policy decisions have consequences and must be thoroughly analysed and properly understood to minimise adverse material surprises. In this way, we can pick ourselves up and live to fight another day.

[Reaz Islam is an investment market specialist]

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The treacherous path ahead

At the core of Bangladesh's economic strength lies its population, which totals 17 crore individuals and ranks as the 7th highest recipient of remittances globally. This demographic powerhouse not only drives one of the largest consumer markets, particularly among the middle-to-affluent (MAC) segment but also fosters a thriving entrepreneurial ecosystem. 

The creativity and innovation of local Bangladeshi entrepreneurs are also key drivers for the growth of the formal as well as informal economies. With 2,500 active startups and an annual addition of 200 new ventures, Bangladesh showcases its dynamism and innovation on the global stage. Furthermore, Bangladesh boasts highly fertile and arable lands, ensuring essential food security for its population. 

This self-reliance on food is crucial to mitigating inflationary pressures and sustaining the well-being of the populace. In addition to that, Bangladesh has solidified its position as one of the premier destinations for garment goods, boasting a Compound annual growth rate (CAGR) of 8.4% over the past decade. 

This growth is propelled by ongoing investments in capacity expansion, the strategic establishment of Export Processing Zones (EPZs) and access to a vast labour market, ensuring a robust foundation for further development. Moreover, Bangladesh's commitment to infrastructure development is evident in its efforts to enhance domestic and regional connectivity, driving advancements in trade. 

Notably, the manufacturing sector has flourished with a significant CAGR of 15.1% over the last decade, surpassing many counterparts in Asia. 

There is also a large informal economy that thrives and helps drive the economy. This includes but is not limited to, technology-driven offshore outsourcing, employment and money flowing to the economy via informal sources that directly and indirectly benefit individuals, as well as improving general purchasing power. These flows are diversified across the economy, which further insulates Bangladesh from economic shocks.

These underlying dynamics are diversified, adaptive and resilient and have thus far provided a strong foundation for growth. What is even more surprising is that much of the growth has been realised without any material foreign direct investment (FDI) and with material challenges and headwinds in the financial sector so far.

Economic resilience is crucial for countries to withstand and recover from various challenges, such as economic shocks, natural disasters or pandemics. Bangladesh, like many other nations, faces its own set of challenges in building economic resilience. 

While it has made significant progress in areas such as garment manufacturing and agriculture, there are undoubtedly areas where opportunities may have been missed or not fully capitalised on.

Some potential areas where Bangladesh could focus on enhancing its economic resilience include diversification of the economy. Reducing reliance on a few key sectors, such as garments, by diversifying into other industries like technology, services and manufacturing. This can help buffer against shocks that affect specific sectors. Progress on this priority has been below average at best.

Then there is investment in infrastructure. Building robust infrastructure, including transportation networks, energy systems and digital infrastructure, can improve the country's ability to withstand disruptions and attract investment. There has been some progress on this but a lot more is required.

Additionally, human capital development is another viable scope. Investing in education, healthcare and skills training can enhance the productivity and adaptability of the workforce, making the economy more resilient to external shocks. 

Unfortunately, the quality of our workforce remains a challenge, and in many cases, trends are not encouraging. Upgrading our most valuable asset, human capital can have a multiplier effect and must be our top priority.

Identifying and addressing these areas of opportunity can contribute to enhancing Bangladesh's economic resilience and its ability to navigate future challenges effectively.

The financial sector lagged as a notable exception, marred by regulatory shortsightedness, governance lapses, and the limited depth and breadth of financial products. Along with the long-standing challenges, the recent additions are the dollar shortage in the foreign exchange market and rampant price levels.

Foreign exchange reserves dwindled by 45%, and the local currency faced a depreciation of 30% in less than two years, creating instability in the foreign exchange market. While the forex reserves stand below $20 billion, a whopping $8.3 billion deficit in the financial account underscores the struggle to balance the external account. 

Adding to the array of challenges, inflation has been sticky above 9% since March 2023, with a two-year average rate of 9.04% due to global commodity price hikes, supply disruptions and currency depreciation. The prolonged elevated price level has been eroding the purchasing power and savings of households, deepening the liquidity shortage in the financial sector, which is already squeezed by financing the government.

Banks and financial institutions are impregnated with growing bad assets, a prime headwind in developing an efficient credit market in Bangladesh. Total distress assets of the banking sector, including non-performing loans (NPL), rescheduled loans and written-off loans, amount to a colossal Tk3 lakh 78 thousand crore in December 2022. The NPL alone Tk1 lakh 45 thousand crore comprised 9% of total loans as of December 2023, along with a capital shortfall of Tk37,506 crore.

The capital market, another integral part of the financial market, is currently developing a reliable source of long-term financing. Investors' confidence is yet to be restored in the capital market. 

From attracting promising IPOs to establishing a foundation for a bond market and launching platforms like SME Board and ATB, BSEC's efforts are laying the groundwork for sustainable growth. Despite regulatory initiatives to fundamentally solidify the market, investors' participation and liquidity in the market remained poor and transitory.

The financial sector, as the beating heart of the economy, needs to be healthy to pump economic activity and accommodate the growth opportunities lying ahead, defying all the challenges. 

The deep-seated issues may not be solved overnight, but a fast-track strategic approach combining both our opportunities and challenges could ensure considerable progress with immediate impact.

To address challenges across all spectrums of financial markets, inward remittances (our major external financial lifeline) can be leveraged. Approximately half of the remittance (~$20 billion) comes through informal channels, which, if redirected, can ease the breathing of the foreign exchange market and restore reserves to a comfortable level. 

Hence, the inflow of remittances needs to be boosted by redirecting them from the unofficial channel to the official channel, and the most productive uses of remittances must be ensured.

First, to attract more remitters to the formal channel, they should be offered a special exchange rate with 5–10% more devaluation of the local currency, along with the other incentives that are already in place. Moreover, special savings and investment vehicles need to be created and offered to the expatriates, which will give them tax-free, beneficial rates of return (12%–14%) backed by some form of guarantee from the government or a well-capitalised institution.

Second, two special-purpose financial stability funds can be created through the investment vehicles issued to the NRBs, one for the recapitalization of banks where needed and the other for listed companies that require growth capital.

The bank fund will be used solely to restore stability and confidence in the banking sector, recapitalizing banks in financial distress and facilitating market-based takeovers of banks, and inventors or remitters will receive proper risk-adjusted returns.

The capital markets opportunity fund will be used to take advantage of opportunities, including but not limited to undervalued securities and somewhat distressed companies that can be turned around successfully for substantial gains. 

Implementing this strategic approach to maximise the potential of remittances offers a pathway to accelerate the recovery of the financial sector while effectively addressing long-standing challenges and seizing previously untapped opportunities. 

However, no initiative will bring its expected result without robust corporate governance within the financial sector, aiming to eliminate financial imprudence, misallocation and corruption.

Implementing a strategic approach to maximise the potential of remittances offers a pathway to accelerate the recovery of the financial sector

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How to fast-track Bangladesh’s economic recovery

The COVID-19 pandemic has undoubtedly disrupted the global economy with unprecedented reach and impact, posing formidable challenges to policymakers and leaving most governments grappling with a perplexing collection of issues that include supply chain and logistical disruptions. To the surprise of many, Bangladesh has not only managed to minimise the blow of the pandemic but, in fact, it has also done relatively well despite many challenges and headwinds.

Since its independence 50 years ago, Bangladesh has come a long way from an agro-based economy to one that is more industry and service-oriented by leveraging its most valuable asset – the workforce. Today, Bangladesh is one of the fastest-growing economies in the world. Before the pandemic, in FY19, Bangladesh posted the highest GDP growth of 8.2 percent in Asia. And even during the pandemic, the country's economy grew by 5.4 percent in FY20, surprising many experts. In FY21, Bangladesh's per capita income grew by an impressive rate of 9 percent and reached $2,227, surpassing India by $280 while Pakistan is already significantly lagging behind by $684. Moreover, according to projections by the UK's Centre for Economics and Business Research, Bangladesh is expected to become the 28th largest economy by 2030 and the 25th largest in 2035.

Readymade garment exports have played a key role in helping the country achieve this growth with the help of the country's attractive labour costs, and this has attracted massive international attention. Foreign direct investment has also been growing over the years to take advantage of such low production cost. Political stability in recent years, economic resilience even amid the pandemic, cost-effective labour, and infrastructural development creates a strong business case for investing in Bangladesh. Although the country is facing some challenges in the areas of bureaucracy (red tape) and corruption, the government has been actively working towards reforming the entire system in the best interests of foreign investment.

Even during the pandemic, the country has displayed immense resilience. Although the lockdown in 2020 has been a significant setback, the country began bouncing back in no time as economic activities resumed once the lockdown was lifted. Timely expansionary monetary policy and the 23 stimulus packages (4.44 percent of GDP) have been pivotal in pulling the economy through the ravages of the pandemic. During this time, remittances, Bangladesh's second lifeline after exports, recorded an all-time high inflow that made the country move one notch up to become the 8th highest remittance earner in the world.

Crisis always creates opportunities and to keep this amazing momentum alive, we now need to re-focus on our limited resources and take a few proactive measures. In order to strengthen our current position as the second-largest RMG exporter, we need to increase direct marketing to consumers, diversify value-added export items and destinations as well as ensure automation in factories to achieve cost efficiency. While graduation from a least developed country is going to be another milestone for us, we need to make sure we are well-prepared to tackle post-graduation challenges. Securing free trade agreements with major trade partners is going to be an integral part of this. In addition, policymakers need to focus on keeping significant budget allocation aside for our priority sectors such as healthcare and education, so we have a healthy and more educated workforce that can contribute towards the sustainably growing economy. The financial sector also requires immediate attention so that the plumbing of money flow becomes more efficient, uninterrupted, and free of leakage and inefficiency.

Bangladesh has managed to successfully overcome almost all obstacles that have stood in its way till date. And the time is now to undertake the right policy decisions and allocate resources efficiently so that Bangladesh can reach its true potential.

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In every crisis, lies a great opportunity

The coronavirus has unearthed many underlying vulnerabilities to the global economy. The virus, which causes an illness called COVID-19, has already claimed over 3,100 lives worldwide, with more than 90,000 infected cases. Although the infection and death rates have appeased to some extent in China, the birthplace of the outbreak, the rapid spread outside the country has crippled all hopes of a speedy recovery from the epidemic.

Protracted factory shutdown in China, the manufacturing superpower that has tightly held grip of 30 percent of the global output, has jeopardised the global supply chain. Although the Chinese authorities are trying to usher workers back to their workplaces, a month after announcing the unprecedented quarantine of a number of cities, manufacturing activity is slowly normalising with productions currently running between 60 and 70 percent of the pre-outbreak levels.

Like many other countries, Bangladesh has not been spared from the repercussions of an interruption in business. Worth of $56 billion, Chinese goods comprise 26.1 percent of imports in Bangladesh, creating susceptibility for the supply chain of major industries owing to disruption in production activities in the world's largest exporting country. Moreover, not only does Bangladesh's readymade garment sector procure a significant portion of its raw materials (more than 50 percent) from China, it also exports around $506 million to China (as of 2018-19 fiscal year). Apparel retailers such as H&M, GAP, and Uniqlo that source their products from Bangladesh are also experiencing lower demand as many retail outlets are being kept shut or operating on reduced hours with lower traffic in China. The adverse demand side impact in the United States and Europe is unknown but Goldman Sachs revised its earnings estimate for the year for US companies to $165 per share, representing no growth in 2020, which is a dramatic move away from the consensus.

Additionally, given that high-spending Chinese consumers account for approximately 46 percent of global luxury brand sales, that the majority of Chinese citizens are currently trapped indoors is leading to subdued demand within and beyond China's borders. Hence, while import volume from China has plunged 21 percent in volume in the first one and half months of 2020, Bangladesh's ability to export as well as demand for Bangladesh's exports at both supplier and consumer ends is likely to take a beating.

Furthermore, the RMG sector is already handcuffed by a lack of negotiation power, with its trade partners having the authority to turn their heads to other countries if local garment factory owners seek a higher price due to possible increase in production costs stemming from the smothered supply chain.

Other sectors such as leather, pharmaceuticals, consumer electronics, cement, steel, jute, among others, may also be impacted due to their high reliance on China for export and/or imports. As such, banks are likely to experience a spillover if overall industrial activity slows down in the country.

Bangladesh's mega infrastructure projects, that are to be a major driving force for expediting industrialisation in the country, are also in danger of losing their pace as Chinese capital and manpower are highly involved in their construction process. A majority of the suppliers of important construction materials and equipment are based in China, which is another worrying issue. The disbursement of the funds committed by China to Bangladesh may be delayed as well due to the outbreak.

In the global commodities market, oil and other basic materials such as coal, copper, aluminium, and iron ore have witnessed significant downturn (S&P GSCI index for commodities lost 8.39 percent in February alone) due to the outbreak. Tumbling manufacturing activity in China and the fears of a significant global economic slowdown have resulted in weak demand for commodities. While the dip in energy and materials prices might create a breathing space for Bangladesh to curb inflation, it will also create significant balance sheet challenges for the businesses that purchased materials for their inventories at comparatively higher prices before the slump occurred.

According to the results from a survey conducted by Morgan Stanley, Chinese analysts expect the production levels in the country to reach 80 to 100 percent by late March. Production in some sectors such as staple food and beverages, coal, industrial truck machinery and electronics are likely to resume faster than the automotive, cement, and apparel equipment manufacturing industries, as per the opinion of the investment bank. If these predictions stand, then the overall impact may remain within a tolerable level. While a certain portion of the demand may be permanently lost, the remaining demand may later bounce back in the form of a J-curve. At present, central banks in affected countries are considering accommodative policies to help their respective economies prevent a downturn. The US Federal Reserve has cut rates by 50 bps to ease the economic impact of the escalating health crisis, a step that was also taken during the 2008 financial crisis.

The implications of the coronavirus outbreak have sent us a strong message about how vulnerable we can be in the face of storms. Now is the time to proactively develop backward integration and reduce dependencies on a single geographic region so as to minimise volatility from external shocks. Other countries that also have a high concentration of their factories in China may currently or soon be rushing to seek alternate destinations for their production processes. While Bangladesh's name may appear in their list of options due to its low labour costs, the lack of high-skilled workers and product diversification may ultimately deter prospective foreign countries from stepping foot in Bangladesh. As such, proper training needs to be provided to close this gap.

Also, considering the high population density of Bangladesh in general as well as the cramped working conditions within the premises of RMG factories, the infection of a single person or a factory worker may lead to the virus inadvertently spreading like wildfire. The manner in which the virus rapidly infected people in cruise ships such as the Diamond Princess or the prisons in China stands testament to this.

Finally, even though Bangladesh is yet to detect any COVID-19 cases, the healthcare sector needs to adopt more stringent and thorough measures to ensure that the country does not face any hiccups in its growth trajectory due to any ugly contingencies given its weak healthcare infrastructure. The COVID-19 is a wake-up call for all of us. At this point, rather than being complacent about not being among the 62 affected countries that are currently battling with the coronavirus outbreak, we need to maintain a cautious stance and take all necessary steps across private and public sectors before it is too late.

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Coronavirus is the wake-up call for us

With the deadline for implementing single-digit interest rates looming on the horizon, understanding the potential ramifications of this directive has become imperative. While the intention behind the rate cut, that is to prop up the pace of industrialisation and private investment, is no doubt important for the country to keep economic growth on track, its impact on the banking sector as well as unintended consequences should be carefully examined given the sensitivity of money flow to the entire economy.

While capping lending rates at 9 percent may mean that banks may engage in a more rigorous credit appraisal process before sanctioning loans to avert default, it may also mean that loan growth will be hampered. Unless alternatives are available, banks may disburse fewer small and medium enterprise (SME) loans and other high-risk entities as such loans involve comparatively higher monitoring costs and higher expected loss for banks. Hence, the intended economic stimulus by bringing down interest rates may not yield the desired results.

Lending rates need to be dynamic and risk-adjusted. Entities that have a higher expected loss on a loan should be charged with a higher interest rate while those with high credibility can be charged 9 percent or even lower. Moreover, given that the associated costs for different loan categories vary, lending rates can also be capped based on the category of the loan. Hence, a way around this is to subject different loan categories to multiple caps instead of a single cap across the board. This model is already in use in South Africa where they have seven different rate caps while Vietnam has an exclusive cap imposed for priority areas such as SMEs, rural advancement and agricultural loans with a view to enhance growth.

Alternatively, a weighted average market rate can be used to arrive at the benchmark. There are a total of approximately 20 countries that follow this model. For instance, Colombia's interest rate ceiling is set 1.5 times above the average prevailing rate in the banking sector. The ceiling is fixed at a certain percentage above the average rate in the market for specific loan products in the European Union, such as 33 percent in France and as high as 100 percent in Germany.

It is also important to consider that lower deposit rates may exacerbate the cash crunch situation of the banks and instigate a bank run. We may have already witnessed a glimpse of the banking sector's possible future when recently as many as 5 million small savers rushed to the post office to liquidate their deposits after it was announced that the post office savings tool's interest rate will be slashed from 11.28 percent to 6 percent for 3-year deposits. Depositors may also fall prey to scammers who can exploit such a situation.

Deposit rates should instead be set based on the health of a bank, which is reflected in its capital adequacy and liquidity situation. Poorly capitalised cash crunch banks should offer higher deposit rates to compensate for the risks associated with depositing money in such banks. Rate consistency with that of other financial instruments also need to be maintained.

Additionally, factors such as service differentiation should also be allowed to play a role in interest rate determination as providing premium quality services come with their own costs.

Instead of micro-managing banks by setting a floor or ceiling for interest rates, the banking sector should be allowed to serve its purpose in facilitating a risk based money flow in the economy so that money can find its own way into the hands of those who will put it to the most efficient use. Banks also need to be provided with the flexibility to fix their own interest rates that is constrained based on the associated risks and banks' own behaviour, rather than being imposed with a single digit cap.

Since the ultimate objective is to bring down the cost of credit in the country, our focus should be on the root cause of the prevailing high interest rates – that is the piling non-performing loans in the banking sector, exorbitant government bank borrowing to finance the expanding fiscal deficit, high risk free rate, and excessive overhead costs in banks. Once these issues are addressed at a granular level, the high interest rate in the economy will organically come down to an acceptable risk-adjusted level in due course of time.

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A more constructive path towards setting deposit and lending rates

From my experience in trading and investing in both liquid and illiquid markets globally for over 30 years, it appears to me that Bangladesh is not yet adequately ready for open-end mutual funds due to unintended structural risks. Unless it is a money market fund that has high level of underlying liquid securities, all open-end funds should be converted to closed-end form and/or perpetual under section 20a of securities law in Bangladesh to reduce a potential of a spiralling liquidity crisis in an illiquid market.

The reality is that we cannot have a managed fund providing frequent liquidity to investors when there are no underlying securities that are liquid and easily tradable without moving the market materially. Short-term funding with long-term or illiquid instrument is a recipe for a liquidity crisis with serious consequences for any market. Open-end funds are certainly possible and also required but not in the current market scenario where limited scrips dominate and since there is no real depth of institutional investors with the exception of the Investment Corporation of Bangladesh (ICB). In order to create the right environment for open-end mutual funds, much work is required to be done by all stakeholders including the regulators. Developing a commercial paper market, tradable Treasury Bills market and other highly liquid investable assets including transferable Savings Certificates market is essential in this regard.

The daily volatility of stocks in Bangladesh is more than 1.50 per cent and therefore daily value at risk is approximately 3.0 per cent (95.0 per cent Confidence). This implies that when people buy or sell an instrument in size over two/three days the asset price can easily move 6.0 to 9.0 per cent positive (buying) or negative (selling) adversely impacting buyer or sellers. Therefore, any sizeable open-end fund seeking liquidity in the secondary market in normal cases may have serious consequences for all investors. This is clearly not the fault of open-end funds itself or the mangers but the market itself which is not prepared to absorb sizeable sale - a basic requirement for an open-end fund. 

In a down market and/or relatively illiquid market in Bangladesh when unit holders reallocate to redeem investments, the open-end fund managers are forced to sell in most cases the best quality and most liquid assets they hold. This implies that the remaining unit holders will have a much higher exposure to less liquid names, and some investors in open-end funds can be left holding the worst possible illiquid investment.  Therefore, all open-end unit holders must be fully aware of incremental risks that exist in open-end funds (relative to closed-end mutual funds) for providing liquidity. Less liquid underlying investments and potential adverse consequences triggered by other investors in the same fund who can exit under more favourable terms, especially in bear markets, may enhance the risks.

The decision of the Bangladesh Securities and Exchange Commission (BSEC) to allow to extend the tenor of CEMFs (Closed-End Mutual Funds) under Section 20a was precisely to avoid such challenges and encourage long-term investments and market stability. All participants need to realise that the price of liquidity option is not cheap in less liquid markets and can have a material adverse impact not only for open-end unit holders but also for all market participants. 

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Structural risks in open-end mutual funds

The main (#1) challenges and opportunities in the capital markets today are driven primarily by inadequate supply of good companies and/or investment alternatives.

Closed-End Mutual Funds (CEMFs) can play a very important, decisive, and sustainable role in providing much needed capital to the entire market as well as a leadership role in institutionalising the investment industry. Multiple purposes can be served. These include providing capital to government (treasury) for key infrastructure projects and highly potential, listed and unlisted companies, and simultaneously facilitating exits via listing and increasing supply of quality scrips to the markets for the retail investors. This is the case (in various forms) that revolutionised the respective investment industry of almost every developed market like our neighbour India leading to improved, efficient flow of funds and a direct, positive impact on the economy.

The key reasons that a well managed CEMF can take the lead are: (1) they have a track record that is auditable and all investors (local and overseas) will have adequate reported history to evaluate each manager independently – a key criteria for any investor (local or foreign); (2) we have a serious lack of skilled professionals in the industry and well managed mutual funds are ahead in terms of both establishing experienced teams and investment processes to take on such a critical role for the development of the investment industry. Whether we like it or not, global investment industry is highly transparent and if we are serious about developing the industry, priority must be given to experienced professionals with a track record (meritocracy). However, in order to benefit the much required 2nd generation fund managers, especially those who are dedicated and serious about development of the industry, must also be supported directly by the government, donor agencies (IFC, DEG, JICA, etc.) or seed investors (including CEMFs) as sponsors at least for the short-term; and (3) finally, although small in size, CEMFs have the required base of capital with relatively longer terms and can make the right long term investments without stressing over providing liquidity to fund investors — challenges undertaken by open-end funds today. In my opinion, having been in the industry for over 30 years, we are not ready yet for open-end funds, given the underlying illiquidity as well as a serious shortage of instrument options. Without realising the key issues, the industry will most certainly not grow to its true potential and fail to contribute to the main purpose of these vehicles – generate attractive relative returns by investing in the credible companies or projects that support the overall economy. The liquidity and low depth of the market is not only a concern for open-end funds but it is also a concern for all the investors, including closed-end funds, since today any sizable trade can easily move the market adversely or can be exploited by only a handful of investors.

In summary, mutual funds are the only credible, independent, and professionally managed vehicles that are positioned to make a dent in the current investment industry challenges. In order to decisively resolve #1 issue above and serve a multi-purpose objective, the following structural and procedural changes are required immediately:

(1)          We have a serious shortage of qualified investment professionals in the industry. Independent Asset Managers should be provided incentives (financial or non-financial) to develop professional teams and processes in order to develop skilled management teams with adequate bench strength. We must also encourage NRBs as well as experienced overseas professionals to the investment industry (similar to the RMG industry with many overseas professionals in the middle management and leadership roles). Without qualified teams (not individuals), the investment industry will most certainly fail. Investment is all about qualified human capital and everything else is secondary and a consequence of leadership and experience.

(2)          The regulators and policy makers can play a much more accommodative and progressive role in developing the mutual fund industry like India has done. The process of approving new funds can be simplified and shortened. In addition, key rules and regulations can be further simplified and be more transparent to minimise any interpretation risks for all stakeholders. Unless it is a money market fund that has high level of underlying liquid securities or instruments, all open-end funds should be converted to closed-end form and/or perpetual under Section 20(a) of securities law in Bangladesh to reduce a potential crisis. The reality is we cannot have a managed fund providing frequent liquidity to investors when we do not have underlying securities that are liquid and easily tradeable without moving the market materially. Short term funding with long term or illiquid instrument is a formula for a liquidity crisis with serious consequences for any market. Open-end funds are most certainly possible and required but not in the current market scenario with limited scrips, and no real depth of institutional investors outside of ICB. In order to create the right environment for open-end funds, much work is required by all stakeholders, including the regulators, for developing a commercial paper market, tradable treasury bills market and other highly liquid investable assets, including transferable savings certificates. To illustrate the liquidity challenge – the daily volatility of stocks in Bangladesh is more than 1.5 percent. Therefore, daily value at risk is approximately 3 percent (95 percent confidence), implying when we buy or sell an instrument in size over 2-3 days, the asset price can easily move 6-9 percent positive or negative. Therefore, any sizeable open-end fund seeking liquidity in the secondary market in normal cases can have serious consequences for all investors. This is clearly not the fault of open end funds or the managers but the market itself that is not prepared to absorb sizeable sale which is a basic requirement of an open end fund.

(3)          We must also modify investment restrictions for all mutual funds to provide more latitude to manage risk in turbulent markets. Security selection is the ultimate goal of any fund manager. The 60% requirement to remain invested in stocks causes serious performance issues in the down markets because managers are forced to buy instruments that are not desirable. Security selection and asset allocation discretion is the role of a professional fund managers. Regulators can certainly intervene and facilitate but the ultimate security selection and asset allocation can be better managed by investment managers.

(4)          A CEMF can also play a material role in enforcing any governance challenges in listed and unlisted companies and at the same time provide market depth and liquidity to all instruments ranging from treasuries, listed and unlisted equity. CEMFs can also finance infrastructure projects via investing in sovereign treasury bonds backed by key infrastructure projects.

(5)          Insurance companies and pension funds can be required to allocate a portion of capital to well managed mutual funds at their discretion using third party and independent consultants (eg. Cambridge Associates, Mercer, etc.) like developed markets.

(6)          In order to reduce the unjustified discount factor for CEMFs, mutual funds should have the option to buy back its own shares (up to 25 percent) at market price to reduce unjustified discount rate. This is also practised overseas to ensure that CEMFs trade close to NAV. If you own a portfolio of blue-chip stocks, the fund NAVs are accurate, and portfolio names are disclosed. I see no reason for CEMFs to trade more than 5-10 percent discount or premium accounting for all other investment risks and opportunities. Unfortunately, this is not the case at present due to lack of clarity in regulations, confusion among investors, lack of institutional investor base, and overall adverse market sentiment issues. I believe by providing this option alone regulators can materially reduce the discount factor overnight.

(7)          At present market environment, given the need for liquidity to avoid any challenges, all open-end funds and CEMFs should be converted to perpetual and tradable funds, and well performing asset managers should be able to issue incremental capital from new investors via a transparent price discovery process (Repeat Public Offering) through a fast-track approach similar to any listed companies. This is how most Closed-End Perpetual Mutual Funds operate in developed markets.

The mutual fund industry represents a very small fraction of the entire market (less than 1 percent of GDP) and without immediate actions the industry will not grow, investment professionals will leave the industry, and it will fail to play the desired role of being the catalyst for growth which is much needed today and for the future of the entire economy. For instance, in India, during early 1990s, after the trade and investment liberalisation and aggressive reforms – both local and global fund managers played a material role in supporting high growth companies that are global brands today – including Suzlon, Infosys, WIPRO, and many more.

Many of the issues are well known and if we truly care for the future of the industry and the economy, the time is NOW for all stakeholders, who can make a difference, to act.

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The future of our investment industry

Over the past decade, Bangladesh economy enjoyed favourable economic environment and grew at approximately 6 percent with tolerable inflation. Major economic indicators like GDP, exports and imports have tripled in the last 10 years; industrialisation and trade have soared to unprecedented heights.

Growth in the “real” economy has fuelled the growth of the country's banking sector which has seen an increase in deposits by over 400 percent and assets by around 500 percent in the last 10 years. Simultaneously, per capita GDP has more than doubled and yet more than half the population is still unbanked.

The central bank's decision to allow licences to nine new banks has the merit. Regardless of political motivations, a logical argument can be made beyond the unbanked population argument that more competition will improve service quality and ultimately benefit the consumers.

From the sponsors standpoint, a logical argument can be made about the potential economic benefit for the sponsors based upon past record, which is estimated to be 25 percent+ over 10 years from inception of a bank approximately 15 percent higher than the risk free rate in Bangladesh.

Past performance do not guarantee future returns

These all sound great theoretically but the ground reality is different, and challenges faced by the management and shareholders of new banks cannot be minimised. The banking industry is already highly competitive. Therefore, unless these new banks get their act together fast, shareholders could suffer a major setback and even some could face extinction.

Let us refresh our memory about how banks make profit. Banks make money primarily in three ways. Firstly, from the spread between the deposit and lending rates; Secondly, from the fees they charge for various products and services, and thirdly from proprietary investments.

This is obviously overly simplified; however, all these modes of earnings potential are possible to some extent provided that the demand is growing, banks are well capitalised and have the proper human resource; and the rest happens automatically. So what are the challenges?

At present, the banking sector is suffering from an acute shortage of skilled and adept professionals.

Except for a few foreign and local banks, unfortunately the quality of staff beyond the CEO, managing director and DMD levels drops drastically. Depth and breadth of knowledge unfortunately is poor. This is an ominous sign for the industry since professional human resource is essential for the growth and development of the industry. These weaknesses obviously facilitate frauds, mismanagement, and value destruction for shareholders and encourage and breed substandard corporate governance culture in the financial sector.

The first challenge for new banks will be attracting the right leadership. It will not be easy to attract talents for a newly established entity. The most likely outcomes are - either you end up recruiting an unqualified team due to budget constraints or you end up paying a significant premium for talents.

If you recruit weak managers, then they end up attracting even weaker subordinates and we all know how that works.

While most banks offer similar commodity type products, they are combating with each other in most cases on price/yield, realistically, the new entrants can gain an initial advantage and capture market share by offering higher deposit rates.

Falling deposit rates at present driven by recent political uncertainty, risk averseness, lack of demand for loans and recent spike in demand for short-term government securities provide a lower rate environment, nevertheless provide no relative advantage to the new banks.

Contrary to popular believe that aggressive marketing or in this case aggressive lending may help quickly capture market share and drive banks' profitability, in reality success of these new banks in the long-run depends on ensuring that they lend to the right clients. Most of us are aware of the result of aggressive growth in the lending portfolios.

As a lender, you only get the stated interest and the principal within the maturity date at best and you have no upside like equity investors. This is why one must wonder why many banks even today lend to entities with no real capital or a sliver of capital created from revaluation and other financial engineering.

If the new banks fall into this temptation, this could be the first nail in the coffin. Chasing yield and risking principal is the fastest way to go bankrupt.

With around half the population unbanked, the biggest opportunity for new banks exists for targeting unbanked rural populations with the right products and services. Opening cost-efficient branches and nimble service centres in suburban and rural areas can substantially boost asset size and simultaneously, bring the much-needed diversification that every lender requires to spread-out its risk.

Despite the challenges, new banks have some vantage points comparing to the existing banks. Currently the industry maintains NPL of 8.93 percent+, which is similar to the levels back in 2007. While all the other government and private commercial banks have been working hard to clean their books, new banks have the luxury to formulate carefully thought-out strategies for market penetration.

It is a well-established fact that many of the existing players are required to recapitalisation to maintain minimum capital adequacy. It is a daunting challenge to concentrate both on business expansion and recapitalisation effectively.

For the past 10 years, in the backdrop of consistent economic growth driven by export and remittance, balance sheets of banks have inflated due to aggressive lending, stockmarket and real-estate bubble and finally the head-wind; the sector is now facing serious challenges due to poor balance sheet. All these incidents provide a roadmap of do's and don'ts for a new bank.

The biggest advantage for a new bank is the opportunity to embrace technologies to get an edge over the existing players. We expect disruptive technologies to impact banking globally and also, to some extent, in Bangladesh.

For instance, mobile technology now provides the plumbing for delivering products and services unthinkable even a few years back. In Bangladesh, more than 70 percent of the population lives in rural areas, where financial services are generally inaccessible. Furthermore, with the advent of 3G technology in Bangladesh, internet penetration promises to grow exponentially in the coming years.

Lessons can be learnt from organisations such as bKash, which has proven how financial services can be delivered conveniently and at a low-cost. We believe this is just the beginning and more game-changing technologies are expected.

As a proponent of a free market, increased supply of banks is generally good for the consumers. However, the road to success is not smooth at all and expected to be even more challenging in the future. Now it is not an option but essential to invest in intellectual capital, attracting deposits at competitive rates, focusing on unbanked population, selecting right clients, learning from past mistakes, embracing new technology, and most importantly developing effective leadership.

How well these banks execute on these dimensions will finally determine the fate of these banks in the future.

The writer is the managing partner of LR Global.

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Challenges for new banks

The Daily Star, Thursday, February 24, 2011

The recent crisis was caused by multiple factors including unabated risk layering in the financial system that led to the bubble. We can debate forever if the bubble was created by random events, policy errors, mismanagement, speculative investment or outright corruption. Most, if not all, financial crises around the world include all the above to some extent and it is only fair to accept that the recent crisis was not any different. In order to diagnose the main issues let us try and connect the dots that are more obvious.

Generally, Bangladesh Bank (the primary liquidity provider) has managed to keep the banking sector reasonably insulated from systemic risks. Unfortunately it was not full proof, and at least to some extent the lack of timely enforcement of some of the existing rules and oversight of warning signs as loans to individuals and corporates ended up leaking into the over-priced capital markets. Obviously this was not intentional, but I believe played a role in inflating the initial bubble. In addition, allowing black money into the capital markets and the absence of capital gain taxation of share investment also played some role in setting the initial stage for layering of risks that was building and provided the environment for manipulation and speculation. Finally, I suspect actual margin in the system provided by some merchant banks and brokerage was to some extent uncontrolled and not adequately monitored. The brokerage fees and other transaction-based fees in some cases took priority and superseded the long-term interest of the investors or the institution itself that was providing leverage.

Easy money often has unintended consequences

When we have easy money it always ends up in a bubble, and bubbles often deflate very painfully both financially and, even most importantly, physiologically which is even harder to recover from. In addition, easy money in a less transparent market (uneven disclosure practices) also has unintended consequences, and creates abuse and manipulation by opportunists who prey on disadvantaged retail investors. Unfortunately we cannot eliminate the presence of such activities that may have contributed to the creation and to some extent deflation of the bubble upon their exit. Even in developed and matured markets, easy money policy was largely responsible for global recession in 2008-09.

Banks, non-bank financial institutions, merchant banks, even brokerage firms provided leverage to the overpriced markets and I suspect in many instances to retail investors who are either uninformed, unsophisticated or outright speculators who had un-sustainable return expectations engaged in “share business” and not share investing. Excess return over a risk-free rate (deposit rate) involves risks whereby higher returns come with the potential for higher risk of loss. Those of us who are in the

markets have encountered rumors that XYZ stock will reach double the existing price, and that “Players” are behind it, without any regard to fundamentals. Unfortunately the retail investors were the collateral damage or left without the chair when the music stopped due to misinformation combined with poor advice, lack of research and, most importantly, aggressive margin loans provided by financial intermediaries. Unfortunately most banks, non-bank financials, merchant banks, even brokerage firms rarely have resources that can evaluate markets. This is probably also due to the fact that we do not have any fiduciary burden on these market intermediaries.

Uneven disclosure and lack of accountability

Beyond banks, NBFI and selected companies, financial reporting and disclosures of publicly listed companies are substandard. Issuers, auditors, and, most importantly, regulators must take this seriously. All publicly listed companies must improve financial disclosure. The requirement of tightening regulation to protect investors is long overdue. Quarterly conference calls with investors and analysts should be mandatory. In addition, we must determine what the obligation of the merchant banker or the broker is when it allows a client to invest or provide leverage to a client. If we do not have some fiduciary burden placed on the financial intermediaries, this problem will be repeated.

You are only as good as your weakest link

We have a serious shortage of qualified human resources and accountability in the financial markets including the regulators (SEC), banks, merchant banks, and brokerage that I believe played a role in the creation of the bubble in the first place. We are already more or less aware of the much talked about malpractices cited by different quarters as the reasons behind the recent crisis - manipulation of the well intended "Book Building" process that lead to overpriced initial public offerings, uninformed and unsophisticated investors incentivised and gamed to join the herd based on rumors and speculations, uncontrolled leverage disbursed by financial institutions in the overpriced market and many more. May be some intentional wrongdoing has taken place but I suspect this was largely due to the lack of adequate professional resources, systems, controls at regulatory agencies as well as financial intermediaries.

Certain practices in capital markets have also contributed to create confusion among already uninformed investors. Following are a few glaring examples of such practices:

First, the concept of bonus shares that are sometimes expressed as issuance of 50 percent, 75 percent and 100 percent stock dividend. In most markets as opposed to Bangladesh, dividend, even if it is in the form of shares, is translated in dividend yield, i.e. the ratio of the realisable value of the cash plus the bonus shares once liquidated (numerator) over the most recent stock market price (denominator), calculated as a percent per share. Expressions like 50 percent, 75 percent and 100 percent stock

dividend in isolation, in my view, distort reality and are often misused in an immature market as Bangladesh.

Second, the face value of stocks is irrelevant for any valuation, and a perception exists that lowering face value is correlated with appreciating stock price regardless of fundamentals. This obviously played a role in creating the bubble since many were attracted to the overpriced market due to this gimmick.

Although the intention was to create uniformity, it was unintentionally fuelling the speculative bubble, and aggravated the situation further.

Third, uninformed investors often misconstrue the revaluation of real estate as a fundamental change in a company's business prospects. Yes an investment in Real Estate can be marked to market and even liquidated to create value, however, if the company relies on cash flow directly or indirectly generated from real estate as a going concern, such practice may provide false expectations about the outlook of the company. It is imperative to realise that a company's real value lies in the expected future cash flow from core and continuing operations and not from onetime (non-recurring) sale/revaluation/mark-to- market of fixed assets unless real estate sales from inventory are an integral part of the company's core operations.

All industry professionals, regulators even print media are equally responsible for this illusion that is not only harmful but in some cases fraudulent, and provides opportunities for rumor mongers to inflate prices over intrinsic values based upon misleading or incomplete information.

The stance of "Blame the unsophisticated investors" is unfair, however all investors and financial intermediaries must take responsibility for their actions, otherwise we do not have a properly functioning capital market. Breaking windows and cars is not the solution. The government's intervention to support the market only makes this problem worse and creates unsustainable moral hazard that is an even more dangerous problem to deal with. The intervention should be the last resort and when used must be properly prescribed and managed only to the extent the support is required.

Otherwise these interventions are not only ineffective but also harmful for the economy at a minimum and may also provide another opportunity to be exploited by manipulators.

The writer is the chief executive officer of LR Global Bangladesh (AMC).

The recent crisis was caused by multiple factors including unabated risk layering in the financial system
that led to the bubble. We can debate forever if the bubble was created by random events, policy
errors, mismanagement, speculative investment or outright corruption. Most, if not all, financial crises
around the world include all the above to some extent and it is only fair to accept that the recent crisis
was not any different. In order to diagnose the main issues let us try and connect the dots that are more
obvious.

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Connecting the dots

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Educational Degrees

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Chief Executive Officer and Chief Investment Officer (CIO) accountable for managing investments, products, operations and business development for CFIA platform. Mr. Islam was responsible for managing over $5.2 Billion in client capital ($40.0 Billion+ leveraged assets) across the risk return spectrum including managing the largest Municipal Arbitrage strategy in the market since 2002. Due to outstanding historical investment performance over the years and innovative investment strategies CFIA was able to attract over $5.2 Billion in client capital across multiple fixed income strategies from $50MM in capital in early 2002. Strategies included short-term funds, fixed income arbitrage, relative value, opportunistic and multi-strategy funds utilizing Municipal, Bank Loans, Preferred Securities, Corporate Bonds, Mortgage Backed Securities, and various hedging instruments. 

Key accomplishments included building a resourceful and highly qualified team of investment, product, and support professionals. Successfully integrated and executed various proprietary trading strategies for clients. Developed substantial experience working with institutional investors including financial institutions, and guarantors. Prior to the last global credit/liquidity crisis (2007-2008), CFIA products delivered superior investment performance across all products (Municipal Arbitrage net 12.61% annualized 2002Q1 to 2007Q2 and Multi-strategy net Lehman Aggregate + 2.3% annualized 2004Q4 to 2007Q2). Under the leadership the business received highest or most favorable ratings across employee satisfaction, audit and risk controls. CFIA also became the most innovative, profitable and the largest client business within Citigroup Alternative Investments.

Chief Executive Officer and Chief Investment Officer (CIO) accountable for managing investments, products, operations and business development for CFIA platform.

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Thyrocare Bangladesh Ltd (TBL), a franchisee of the international laboratory chain giant Thyrocare, received the College of American Pathologists (CAP), USA certification for continuous improvement in Quality. Thyrocare is providing international standard blood tests through fully automated and integrated laboratory systems which provide accurate and world standard reports. 

Thyrocare Bangladesh Ltd (TBL), a franchisee of the international laboratory chain giant Thyrocare, received the College of American Pathologists (CAP), USA certification for continuous improvement in Quality.

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Career History

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Entrepreneur and seasoned investment/financial services professional with more than 30 years of leadership, innovation, restructuring, business development and execution expertise.

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