The pioneers of NBFI transformation in Bangladesh

0


In 1981, when Bangladesh was a newly independent nation lacking a foothold in almost every aspect, financial problems were rife.

The struggle was real both for the people and for the state because there was relatively no leading industrial plan on which the country and its people could fall back financially. What was needed was an institution that would play a central role in the development of the industrial landscape of the country.

To bridge the gap, in 1981 the Industrial Promotion and Development Company of Bangladesh Limited was established as the country’s first private non-bank financial institution with the Government of Bangladesh, as well as a distinguished group of development agencies. , to help Bangladesh achieve financial independence in a shorter timeframe.

At first, the focus was only on financing industrial projects until 2015. Then, the Swiss-based investor, the Aga Khan Fund for Economic Development, transferred its stake to BRAC – the largest non-profit organization. government and its allies.

The company name was changed to IPDC Finance Limited as it turned to small and medium scale clients instead of large industrial clients.

The new board of directors of the financial institution set a renewed business direction that left more room for innovation and exploration of areas that would meet the socio-economic and sustainability priorities of Bangladesh.

Since then, this revolutionary financial institution has been at the head of the country’s financial growth mechanisms, financing SMEs and businesses run by women at the lowest cost and for the best benefit thanks to its multiple support projects.

And today marks 40 years that PIDC Finance is the most reliable and fastest growing financial institution in the country.

40 years of servitude and a myriad of projects

Regarding the course of IPDC, Mominul Islam, the managing director of the financial institution, said: “IPDC has played a decisive role in industrial development from the very beginning, when private commercial banks arrived in the country. But we survived a tough time from 2005. to 2006, when non-performing loans reached alarming levels. “

However, IPDC has managed to become one of the most efficient lenders in the country, as it has managed to keep its non-performing loans to less than a tenth of the industry average.

Recalling the start of his career at IPDC, Islam said: “It was at that time that I joined IPDC as head of operations. Since then, we have tried to put in place a solid risk management framework, a governance policy and to collect bad debts. grown since then improving the whole system. “

The reliability of IPDC is further enhanced by its distinguished board of directors which includes highly respectable staff from the Government of Bangladesh, BRAC, Ayesha Abed Foundation, Bluechip Securities Limited and RSA Capital Limited, among others.

Over the past 40 years, IPDC has strived to improve those areas of society that often go unnoticed. To solve these problems, IPDC has implemented many innovative projects which not only look good on pen and paper, but are also effective in generating maximum benefits for its users.

This includes a five-year strategy document that ensures change and development by realigning its focus on youth, women and other underserved areas.

IPDC currently has a project called “Joyee” which distributes a small amount of SME loans to women entrepreneurs at the lowest interest rates to motivate more women entrepreneurs to enter business areas of the country.

“We believe that women entrepreneurs and SMEs will become a huge force in the next 10 to 15 years,” Islam said.

IPDC has also designed a blockchain-based supply chain finance platform ‘Orjon’, which is the first of its kind in Bangladesh, to support micro and small entrepreneurs with low cost loans.

A similar project called “Dana” was started by IPDC, which has proven to be an indispensable initiative to help the vast network of micro and small retailers across the country.

“Dana” was designed with accessibility and transaction-based working capital in mind for retailers to facilitate structured, unsecured, low-cost financing.

Regarding “Dana” and its success, Islam commented, “For any industry, the key success factor is reaching the customer segments that are not being served. ”

With 75 percent of around 1.3 million unbanked micro-traders, IPDC has found its ground. Retailers in remote areas who were not included in financial inclusion have access to financing under the DANA platform to enrich their business. With increasing income and higher standard of living, customers are destined to develop freely.

As part of its long-term plans to serve the country, IPDC plans to go beyond the numbers to create a positive impact on society and people’s lives by offering affordable home loans, going beyond the perspective of mega-cities, supporting women entrepreneurs and SMEs, and bringing convenience to the home with a vision to become the most passionate financial brand.

IPDC’s strategy to serve underserved sectors of society and the economy is not an empty word. This has proven to be a success in recent years as the financial institution has increased its portfolio to over Tk 4,500 crore from less than a fifth of that amount.

IPDC’s success so far has been monumental, growing twice as fast as that of other financial institutions in the country. Speaking of the success story, Islam believed that timely initiatives and visionary goals helped IPDC to become a leading non-bank financial institution (NBFI).

He continued, “We noticed that the real estate sector was being overlooked as banks and NBFIs were mainly financing houses in Dhaka and Chattogram. But we decided to finance houses outside of these two cities. This led us to introduce “Bhalo Basha”, a home loan service, which we launched last year. “

The strategies and tactics adopted, tested and employed by IPDC Finance have acted as a torchbearer for the country’s NBFI industry. Over a period of four decades, he created a proven path of success for other financial institutions in Bangladesh.


Share.

About Author

Comments are closed.