IPDC Finance: The transformational pioneers of NBFIs in Bangladesh

In 1981, when Bangladesh was a newly independent nation that lacked footing on almost every aspect, struggling with finances was commonplace. 

The struggle was real for both the people and the state as there was relatively no industrial foreground for the country and its people to fall back on financially. What was needed was an institution that would play a pivotal role in developing the country's industrial landscape.

To address the gap, in 1981, the Industrial Promotion and Development Company of Bangladesh Limited was formed as the country's first private non-bank financial institution with the Bangladesh government, along with a distinguished group of development agencies, to help Bangladesh achieve financial independence in a shorter time frame.

In the beginning, the focus was solely on financing industrial projects until 2015. Then, Switzerland-based investor, The Aga Khan Fund for Economic Development transferred its stake to BRAC - the largest non-governmental organisation of the world and its allies. 

The company's name was changed to the IPDC Finance Limited as it shifted its focus to small and medium-scale clients instead of large, industrial ones. 

The new board of the financial institution chalked out a renewed business focus that left more room for innovation and exploration of the areas that would address Bangladesh's socio-economic and sustainability priorities. 

Since then, this groundbreaking financial institution has been leading the country's financial growth mechanisms, financing SMEs and women-led businesses for the lowest cost and the highest benefit through its multiple support projects. 

And today marks 40 years of IPDC Finance being the country's most reliable and fastest-growing financial institution.

40 years of servitude and a myriad of projects

Regarding IPDC's journey, Mominul Islam, the Managing Director of the financial institution, said, "IPDC has been playing an instrumental role in industrial development from an early stage when private commercial banks first arrived in the country. But we survived a difficult period from 2005 to 2006 when non-performing loans increased to alarming levels."

However, IPDC had managed to become one of the most efficient lenders of the country as it managed to keep its non-performing loans within one-tenth of the industry average. 

Recalling the beginning of his journey at IPDC, Islam said, "This was when I joined IPDC as the Head of Operations. Since then, we have tried to build a robust risk management framework, governance policy and recover the bad loans. The organisation has grown since then by improving the whole system."

IPDC's reliability is further strengthened by its eminent Board of Directors that include highly respectable personnel from the Government of Bangladesh, BRAC, Ayesha Abed Foundation, Bluechip Securities Limited and RSA Capital Limited, among others. 

For the last 40 years, IPDC has been striving to improve those sectors of society that often go unnoticed. To address these issues, IPDC has established many innovative projects that not only look good on pen and paper but also perform to generate maximum benefit for its users. 

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

IPDC currently has a project called 'Joyee' that distributes a small amount of SME loans to women entrepreneurs at the lowest interest rates to motivate more women entrepreneurs to enter the country's business zones.

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

IPDC 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 initiated by IPDC, which has proven to be a much-needed initiative to help the vast network of micro and small retailers across the country. 

'Dana' was designed keeping in mind accessibility and transaction-based working capital for retailers to facilitate financing in a low-cost, collateral-free and structured manner. 

Regarding 'Dana' and its successful run, Islam commented, "For any industry, the key factor for success is reaching the segments of customers that remain unserved." 

With 75 percent of approximately 1.3 million micro-merchants being unbanked, IPDC found its ground. Retailers from remote areas who were out of financial inclusion are given access to finance under the DANA platform to enrich their business. With the enhanced income and higher standard of living, clients are destined to grow unbound.

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 providing affordable home loans, going beyond the prospect of megacities, supporting women entrepreneurs and SMEs, and bringing convenience at home with a vision to become the most passionate financial brand.

IPDC's strategy to serve the underserved sectors of the society and economy is not empty words. It proved to be quite a successful one over the last few years as the financial institution has grown its portfolio to over Tk4,500 crore from less than one-fifth of that amount.

IPDC's success so far has been monumental, growing twice as much relative to other financial institutions in the country. Speaking of the success story, Islam opined that time-befitting initiatives and visionary targets have helped IPDC become a leading non-bank financial institution (NBFI).

He continued, "We noticed that the real estate sector was neglected as banks and NBFIs were mostly financing homes in Dhaka and Chattogram. But we decided to finance homes outside these two cities. This led us to introduce 'Bhalo Basha,' a nationwide affordable home loan service, which we started last year."

The strategies and tactics adopted, tested and employed by IPDC Finance have acted as a torchbearer for the NBFI industry of the country. In the period of four decades, it has created a proven path of success for other financial institutions of Bangladesh to follow.