The rising case of IPDC Finance

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Rising from the ashes
After a long and hard-fought war, Bangladesh liberated herself but found itself in shackles of a post-war. In 1981, while the country was expanding on her industrial wings, much assistance was needed to fulfill the needs of the nation. To cater to those unbound dreams, the first-ever private non-banking financial institution was formed which now is called IPDC Finance Limited. Today, when a majority of financial institutions are struggling with default loans and a lack of corporate governance, IPDC Finance Ltd has achieved stellar success by rolling out a raft of successful business models.

Adopting a Socially Responsible Business Model
However, IPDC’s journey was not smooth. In 2006, its classified loan stood at 37 percent. It did not have a proper corporate governance-related model, risk management framework, technological module, and dedicated loan recovery unit. Since then, the country’s first private sector financial institution has grown from strength to strength by improving the whole system. Time-befitting initiatives and visionary targets have helped the NBFI become a good one. IPDC adopted the socially responsible business model and established its A Home for Every Family, Empowering Women, Creating Entrepreneurs, Beyond Mega Cities (Affordable Home Loan), Bring Convenience at Home, Automated Supply Chain Finance. To reach the mass, IPDC rebranded itself with a new name, color, and logo.

Eyeing the sweet spot with Affordable Home Loan-Bhalo Basha
The NBFI has now decided to go big in the housing sector to better its success, by providing loans to underprivileged clients living in the remotest parts of the country. IPDC will increase its home loan to Tk 3,500 crore in contrast to around Tk 700 crore disbursed as of March this year. The country has enjoyed a considerable improvement in food sufficiency, education, and healthcare, but a well-furnished home is pretty much missing from the achievement. While the majority of the lenders in Bangladesh usually offer home loans to the upper class and are focused on two megacities Dhaka and Chattogram. As a result, people who belong to low and middle-income groups and live in other parts of the country, have to build homes by using small savings, but the construction faces hiccup because of a shortage of funds.

In most cases, they require 10 to 15 years to build their dream home, meaning a waste of time and money. It prompted IPDC to introduce a nationwide affordable home loan product titled “Bhalo Basha” in February this year. Clients, who earn a minimum of Tk 20,000 per month, are eligible to apply and take out a loan of Tk 50 lakh at an interest rate of 9.99 percent. The repayment tenure is a maximum of 25 years. IPDC has started to lend to people living outside of Dhaka and Chattogram. People from the lower middle-income group such as school, teachers, nurses, and security guards will turn into our core clients if the roadmap is implemented.

Filling the gap with Women Empowerment – Joyee
Financial freedom is the key driver of Women Empowerment. Hence, IPDC is now giving special attention to developing new women entrepreneurs as only 3 percent of the SME loans usually go to them. Women’s presence in the formal job sector is only 14 percent, whereas 33 percent of the university students are female. Last year, IPDC launched a dedicated credit product for women entrepreneurs named ‘Joyee’, which offers maximum finance of Tk 50 lakh at an interest rate of 8 percent with a repayment period of one to five years. IPDC plans to disburse 30 percent of its total loans to women entrepreneurs by 2030. IPDC has already taken several initiatives to materialize this plan.

Leading the Blockchain based Digital Supply Chain Finance Platform – Orjon
IPDC is still focusing on the SME sector as it has a significant role in generating new jobs and 30 percent of its total outstanding loans have so far been given out to the small and medium entrepreneurs. Under the SME credit program, it rolled out a digital supply chain financing product titled ‘Orjon’, enabling entrepreneurs to get a variety of short-term loans in the field of factoring, reverse factoring, work order and distributor financing. The product carries an interest rate of 11-14 percent.

Stunning the observers with stellar results
The classified loan now stands at only 1.20 percent of its total outstanding loans of Tk 4,700 crore, far below the NBFI sector’s average NPL of 10.50 percent. The volume of loans and deposits rose to Tk 4,432 crore and Tk 3,707 crore respectively in December last year, up from Tk 567 crore and Tk 399 crore four years ago. IPDC enjoyed a healthy net profit of Tk 45 crore last year, up 34.16 percent from a year ago and 172 percent from four years earlier.

Moving ahead with the economy
Fund diversion is one of the key reasons behind the increasing default loans in the banking sector in Bangladesh, prompting IPDC to give full efforts to prevent the tendency and to pull off the success by establishing a strong monitoring cell. IPDC underscored the need to develop a vibrant bond market in Bangladesh as it is highly difficult for banks and non-banks to give long-term loans based on short-term deposits. They are working with the Bangladesh Bank and the Bangladesh Securities and Exchange Commission to this end as a lively bond market must help ease liquidity pressure on banks and NBFIs.

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