Finance School by PFS Md. Nafeez Al-Tarik

My guest today is Amitabh Guha Roy, currently working as the General Manager at Bkash, a company that transformed the payment service industry of Bangladesh. He is in charge of the department which drives bKash’s annual revenue plans and yearly budget, through pricing, analysis and analytics. Previously he used to work as a Product Manager at Standard Chartered Bank. He graduated (With director’s honor) from IBA, University of Dhaka, majoring in Finance. During his undergraduate years, he represented the champion teams in Battle of Minds, Masters of Ideation and many other business competitions, both national and international. Professionally, he is a Certified Supply Chain Analyst and also in the final stage of earning his CFA degree.

The discussion points are mentioned below:


I know Amitabh since he came to me as a mentee at PFS for CFA Classes. He is one of the smartest young professionals I know and later on, he also added value to PFS through his teaching skills as well. He was working as an international graduate (IG) at Standard Chartered bank,  a bank where many university graduates aspire to get an opportunity. Despite having a great position at an MNC bank, he decided to go for a position at Bkash back in early 2017. That time Bkash was beginning to get some traction and it was a tough choice leaving an MNC bank position to Bkash at that point of time. I can remember, you asked for suggestions from me and I did encourage you to move to Bkash. Can tell us a bit detail on what was going through your mind that time and how tough was the transition? and How your current job role is different from banking?
Many people find it hard to understand what type of company bKash is? Is it like a bank? In the initial years we used to see that it was written as "a Brac Bank Company". We don't see that very often now a days. What type of company it is?
We have many companies in Bangladesh like that. Mostly are banks' subsidiaries. Like Rocket, Mcash etc. We have also seen Nagad entered in this industry. Can you share some ideas about MFS industry? In the payment service industry, are there any companies other than MFS? And how competitive the industry is?
We have seen companies like MPESA created a great impact in the african region. We also have seen Paytm in India. How Bangladeshi MFS companies are different from those?
You are a certified supply chain analyst. Can you please describe about the distribution model of MFS industry? Do you think the current distribution model is sustainable or there is disruptions expected in the model?
2020 came as a storm to the world economy and all the economies are suffering and finding it hard to reinvent themselves. If we list down few companies that are making a great impact to the society through their works, bKash should be in one of the top few companies. The other day I was asking people about when they last touched a paper money. It seems that many did not touch a paper money in last 2/3 months. That is quite amazing in bangladesh where the predominant transaction method is cash based. Is it true that this pandemic came as a blessings to bKash and more and more people will be habituated with bKash going forward?
We have also seen people sending remittance quite smoothly through bkash and it is directly coming to their mobile. That is a great benefit to both the person who is sending and receiving remittance. It is extremely cumbersome getting money from a bank through western union or other services. Can you shed some light on the remittance industry and how MFS can disrupt in this business?

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My guest in this Podcast is Mr. Sadekur Rahman. He has over 10 years of experience in banking. His area of specialty includes Relationship Management of large Corporate clients, Credit Analysis, Financial Analysis, Credit Monitoring, etc. Today, we will discuss the current financing landscape of Bangladesh with special attention to the banking sector. We will also discuss post-COVID challenges for the economy in general and banking sector in particular. I and Sadek bhai are designing a course on "Credit Risk Management". It will be a small group of people and interested participants can pre-book their participation by contacting us. 

In this podcast, we discussed the following topics on the economy and the banking sector.


The COVID-19 came as a perfect storm for the economy and the banking sector. What are the main challenges that the banking sector is facing today?
Everyone is talking about a New Normal for the economy and the banking sector. What does "New Normal" mean?  What will be the new normal in our banking sector Post COVID? Will there be any fundamental change in the nature of banking like the adoption of Fintech?
Most of the economies around the world are providing massive stimulus to the economy with the US being the dominant stimulus provider among all economies. Bangladesh Govt. has also announced massive stimulus packages to revive the economy. The size of all these packages exceeds BDT 1 lac crore which is approx 3.7% of our GDP. Medium for implementation for most of the packages remains the banking sector? A sector that is already under stress condition. What could be the impact on the banking sector in implementing these packages?
Some experts have suggested the use of the Credit Guarantee scheme. What's your take on that? Does it have any downside? How it is being practiced in other peer countries?
Economists differ widely in the shape of our Economic recovery. Some people are hoping that it will be a "V-Shape" recovery. some are saying it can "U-shape", while others saying it will be a "W-shape" recovery. The most pessimistic is "L-shape" which is prolonged depression. Can you explain all these recovery shapes? How do you think it may affect the banking sector?
The latest buzzword in the banking sector is downward salary adjustment and/or lay-off? There have been strong debates on it and we have seen in the newspaper regarding some proposals on it. This will probably the first time in the history of the banking sector such things happening.  How do you think banks and bankers will tackle this rather delicate issue?
We have just seen that the budget is proposed. And many banking sector analysts are disappointed with no incentive for the banks in the budget. No tax cut or stimulus package. What is your take on the budget with respect to the banking sector?
There has been a huge hue and cries on the interest rate cap @9% except for credit cards.  What could be the impact of interest rate capping on all loans from April 1, 2020?
So, what does all your analysis mean for the investors in the banking sector? Prices look extremely cheap. How the investors should position themselves?
Is there any light at the end of the tunnel? Anything that makes you hopeful about the sector? Any silver linings?
My last question is regarding a career in Finance: What do you suggest to a young grad who is preparing oneself for a career in Finance in Bangladesh? Especially, if any young grad wants to build his or her career in the finance industry, what would be your suggestions?

Thanks to Mr. Sadekur Rahman. And many thanks to the listeners.

My guest in Episode 4 is Mr. Shahriar Azad Shashi who is currently working as Fund Manager at LankaBangla Securities Limited. He is a CFA level 3 candidate in December 2020. He completed his BBA in Finance from the University of Dhaka which is my Alma Mater also. He has also done his MBA from IBA, University of Dhaka. Prior to working at LBSL he worked at BRAC EPL Stock Brokerage, LankaBangla Investments Limited, EBL Securities Limited, and Royal Capital Limited. He discussed the following issues of Bond Market.


You have written a newspaper article on The Business Standard on the Bond Market in Bangladesh. Can you first talk about the Basics of Bond? Like what is a bond and how does it differ from equity?
So, you said that A      bond is a very beneficial instrument for both the issuer and the investor.      Can you first discuss from the supply side perspective? Why is bond important for the issuer?
So, we have banks who can lend. In fact, we have many banks and NBFIs that are lending to different companies. They can lend to different companies. Why will they go for issuing bonds? What is the incentive for them?
Thanks for your explanation. You have also talked about the demand side. So, how bond as an asset class is beneficial to investors? From an investor's point of view, why is having a      vibrant bond market important?
You have talked about the government's borrowing from the banking sector. And it is likely to increase and the government just announced the budget proposal for the 2020-21 fiscal year. Can you briefly discuss the deficit financing plan?
You have said that the corporate bond market is non-existent. Can you describe the corporate bond market?
You have also discussed attracting foreign investors in the bond market. Can you explain your thoughts?
You also discussed creating a new category of mutual funds that can be created in the country, which will invest in that type of bond. Can you elaborate on that?
So, what are the problems that are not encouraging both the demand and supply-side participants to come forward in issuing and investing in bonds? What can be done to improve it?
So, under the current scenario, if anyone wants to invest in bonds, how can they buy bonds?

The last question is regarding a career in Finance: What do you suggest to a young grad who is preparing oneself for a career in Finance in Bangladesh? Or to anyone who wants to change their industry in favor of the financial services industry?

This podcast discusses the drivers of economic growth under the Neoclassical growth theory.

The economic output represents the aggregated activity of billions of people, influenced by forces seen and unseen. Despite the difficulties, economists cannot resist trying.

Forecasters usually rely on two different predictive approaches.


Theory-based:      This one is shaped by how economists believe economies behave.
Data-based:      This one is shaped by how economies have behaved in the past.

The simplest of the theoretical bunch is the Solow growth model, named for Robert Solow, a Nobel-prize winning economist.

Robert Solow developed a model that explained the contribution of labor, capital, and technology (total factor productivity) to economic growth.  The model shows that the economy’s productive capacity and potential GDP increase for two reasons:


accumulation      of such inputs as capital, labor, and raw materials used in      production, and
discovery and application of new technologies that make the inputs in the production process more productive—that is, able to produce more goods and services for the same amount of input.

Solow's growth accounting equation shows that the rate of growth of potential output equals growth in technology plus the weighted average growth rate of labor and capital.

He also said that if capital grows faster than labor, capital will become less productive, resulting in slower and slower growth. According to his model, there are two major implications of potential GDP:


Long-term sustainable growth cannot rely solely on capital deepening investment that increases the stock of capital relative to labor. This means, increasing the supply of some input(s) relative to other inputs will lead to diminishing returns and cannot be the basis for sustainable growth.
Given the relative scarcity and hence high productivity of capital in developing countries, the growth rates of developing countries should exceed those of developed countries. As a result, there should be a convergence of incomes between developed and developing countries over time.

I have discussed some excerpts from the book ““Good Economics for Hard Times” by Abhijit V. Banerjee and Esther Duflo. Listeners might learn a lot by reading the book. In this podcast, I tried to relate the Neoclassical growth theory with the empirical evidence shown in the book.

This podcast discusses on the topic "Crowding Out Effect". When government budget deficits rise too much, government borrowing may divert private sector investment from taking place. This effect is known as the “Crowding Out” effect. So, the crowding out refers to how fiscal deficits impact the economy, financial system, interest rates, and inflation. When the government spends money, it must compete with the private sector to get its hands on whatever it is trying to buy.  The term crowding out refers specifically to how the government extracts resources from the private sector to pay its bills and what the consequences are.

If you have any questions, comments or suggestions, please email to nafeezfin11du@pfsbd.net

This podcast discusses about some of the basic principles of Capital Budgeting, for example, decisions are based on cash flows, after-tax cash flows are considered, finance costs are ignored, sunk costs are ignored etc. One may visit the think to know more: http://pfsbd.net/2020/05/22/basic-principles-of-capital-budgeting/