How IPDC weathers big storms

IPDC Finance PLC has built its resilience on two key pillars: strong governance and a commitment to continuous improvement. These foundations, according to Managing Director Rizwan Dawood Shams, enable the company to make bold strategic decisions, embrace innovation, and stay ahead of the curve, even in turbulent times.

In an interview with The Business Standard, Rizwan discussed the major challenges confronting the finance company sector and how industry leaders like IPDC are navigating the storm.

"The finance company sector in Bangladesh is going through one of its most difficult phases," said Rizwan. "At the heart of the issue is an uneven playing field. Unlike commercial banks, finance companies don't have access to low-cost CASA (Current Account-Savings Account) funds, putting them at a disadvantage in terms of funding costs."

He further noted that the options for alternative financing are limited, and the bond market remains underdeveloped. "We're often left with fewer avenues to manage liquidity efficiently, while regulatory policies often require finance companies to operate with a different set of constraints than banks," he said.

From higher provisioning requirements to relatively limited central bank liquidity support, finance companies operate under tighter conditions. Even attracting strong shareholders or board members is often more challenging than for banks.

Yet, Rizwan believes the current landscape separates the resilient from the vulnerable.

"Not all finance companies are struggling," he said. "The institutions like IPDC that consistently prioritise governance, innovation and strategic foresight are positioning themselves for sustainable and long-term growth."

Rizwan joined IPDC, the country's first private sector finance company, in 2007 and rose to the top in early 2024. His journey included leadership in corporate business, SME financing, retail solutions, innovation, and strategy — making him instrumental in IPDC's transformation.

Following a major shift in shareholding and board leadership in 2015, IPDC pivoted from targeting large clients to broader segments. Despite that, it became Bangladesh's fastest-growing finance company.

Over just seven years, IPDC expanded its balance sheet tenfold while maintaining a non-performing loans (NPL) ratio below 5% for a decade — an industry-leading performance. As of September, the sector-wide NPL ratio had surpassed 35%.

"That difference didn't happen by chance," said Rizwan. "It's the result of deliberate choices. The key differentiator is strong governance."

He emphasised that sound governance, agile decision-making, and forward-looking strategies are what set top-performing finance companies apart. Those that invest in process optimisation and minimise turnaround time gain a competitive edge by offering quicker, more efficient service.

"While competition is intense, the institutions that emphasise governance, efficiency, and responsible lending continue to outperform," he added.

However, the road ahead remains challenging.

The institutions like IPDC that consistently prioritise governance, innovation and strategic foresight are positioning themselves for sustainable and long-term growth.

- Rizwan Dawood Shams, Managing Director, IPDC Finance

High NPL levels are a continuing concern, straining stability and limiting growth of the sector. Possible monetary policy tightening could further restrict credit supply. Political uncertainty, especially surrounding upcoming elections, adds to the risk.

Still, Rizwan remains hopeful.

"2025 will not be the end of the world," he said.

IPDC is staying true to its mission of building a sustainable business, with a focus on empowering women, youth, SMEs, underserved communities, and everyday savers. By helping its clients grow, the company aims to ride the next wave of opportunity together.

"One of our core strategic focuses is empowering women entrepreneurs," Rizwan said.

IPDC's flagship initiative, Joyee 360, not only offers affordable loans to women-led businesses but also provides workshops and business development training. At its Joyee 360 sub-branch in Dhaka, entrepreneurs receive access to finance, capacity development, market opportunities, and business support — all under one roof.

IPDC's tech-driven, lean operations and collaborative business model have allowed it to support a growing number of clients while safeguarding shareholder interests.

A prime example is its pioneering work in supply chain finance. Since launching the service in 2012, IPDC now serves over half the market in this segment. SMEs working with hundreds of large corporations receive collateral-free working capital loans through IPDC's risk-sharing collaboration with the corporates. The result: seamless, need-based financing.

With structural challenges in the market gradually being addressed, Rizwan sees further growth on the horizon. He believes IPDC's competitive edge lies in customer and investor trust, and that its commitment to sustainability only accelerates its momentum.

Focusing on underserved segments has been a key driver of IPDC's rise, and Rizwan believes this will remain essential given Bangladesh's socio-economic landscape.

Take used car financing, for instance. While many lenders refused loans for second-hand vehicles, IPDC broke the mold. Recognising how such vehicles can become income sources, especially for young entrepreneurs, it became the first to offer financing for them.

More on the business front, IPDC has built a robust and diversified retail loan portfolio aimed at fostering financial inclusion. From personal loans to auto financing, the company emphasises need-based, responsible lending to support everyday aspirations. "We don't just disburse loans — we aim to enable life goals," said Rizwan. "Whether it's purchasing a vehicle for added security or managing educational expenses, our products are designed to create real impact."

One of IPDC's most impactful offerings is its affordable home loan programme, which reflects the company's commitment to inclusive development. "We've always believed that every person deserves a home, and this belief is deeply inspired by the vision of Sir Fazle Hasan Abed," he said. "Access to safe and secure housing is a foundation for dignity and progress. At IPDC, we've tried to carry forward his vision by making homeownership more accessible for more families outside of metro areas of Dhaka and Chattogram."

By offering affordable home loans with competitive rates, simplified documentation, and flexible repayment terms, IPDC is helping first-time homebuyers, many from underserved communities, take their first step toward stability and upward mobility.

"Our approach combines empathy with financial prudence," Rizwan added. "We understand that a home is more than a financial asset — it's where dreams take root and futures are shaped. And we're proud to be playing a part in making that a reality for more Bangladeshis."

The company has been widely recognised for its wide range of efforts, including being named a top finance company in Bangladesh Bank's sustainability rating.

"The lower the cost of funds, the more relief a lender can pass on to borrowers," said Rizwan, calling for reforms that allow skilled industry professionals to drive the transformation of Bangladesh's financial sector.

He noted that the Finance Companies Act 2023, though well-intentioned in addressing challenges within mismanaged finance companies, has introduced certain restrictions that may benefit from further refinement to better support well-governed institutions.

"The Act imposes a strict limitation on individual or institutional shareholding in a financial company, capping ownership at a maximum of 15%. Furthermore, it expressly prohibits any person or its related entity from holding a substantial stake — defined as exceeding 5% — simultaneously in multiple banks or financial institutions" he said, referring to a couple of key provisions of the Finance Companies Act 2023. "While the intention is to prevent excessive control by any single entity, it's also important to recognise the value that committed institutional investors bring to the table, particularly those with a long-term vision and a proven track record of governance."

He suggested that instead of limiting their participation, the law could consider creating more space for such investors in the decision-making process. "Increasing board representation for reputable institutional shareholders in proportion to their shareholding would not only encourage their continued involvement but also strengthen the overall governance and strategic direction of finance companies," he added.

Rizwan also pointed out a few other areas where regulatory parity with banks could support a more level-playing field. "For example, the restructuring and rescheduling guidelines are more stringent for finance companies compared to banks. This disparity makes it more difficult for finance companies to support struggling but viable borrowers during periods of stress. Harmonizing these policies would enable them to better serve their clients while managing risks effectively."

Additionally, he noted the importance of aligning deferred tax treatment between banks and finance companies. "Currently, there is a lack of consistency in how deferred tax is accounted for; aligning this with that of banks would ensure greater fairness and comparability across the financial sector," he said.

BRAC's acquisition of IPDC from a foreign investor in 2015, he added, was a turning point that propelled the company to its current stature.

Rizwan, who has studied and worked both in Bangladesh and abroad, including stints at foreign-owned banks, is optimistic about what lies ahead. For him, IPDC's future will be driven by an uncompromising stance on sustainability and compliance, strong risk management, innovative solutions, operational efficiency, and a culture of meritocracy.

"These will be the keys to our success in the coming years," he concluded.