Thrust on effective ways for better management of syndication deals

Speakers at a seminar have laid stress on need for global innovative solutions of structured finance for large-sized infrastructure projects in Bangladesh as the syndicated fund considerably minimize the business risks.
IDLC Finance Ltd, a non-banking financial institution (NBFI), arranged the seminar on "Syndication Financing in Bangladesh: Past, Present and Beyond" at a hotel in the city Wednesday.
Started in late 1990s, the syndicated financing market has been quite developed to deal with the innovation of better solution as per the lenders' requirement and entrepreneurs' expectation, they said.
To take the market to the matured level, the speakers emphasised on arranging regular discussions among the participating lenders and lead arrangers, and making a common platform of the players in the market.
Participated by nearly 100 high- and mid-level officials from different banks, financial institutions, regulators and other key stakeholders, the seminar mainly focused on discovering the effective ways for a better management of syndication deals processes and thus better industrial management in Bangladesh.
Mesbah Uddin Ahmed, head of structured finance at IDLC, moderated a panel discussion at the function, which was addressed, among others, by HM Ziaul Hoque Khan, its deputy managing director.
Kazi Farhan Zahir, senior manager of IDLC, made a presentation on syndication financing at the seminar highlighting different issues including prospects, challenges and opportunities of effective syndication loan deals.
When several lenders come forward to finance a single project, its all risk elements are thoroughly assessed by the same number of experts, as such the fund risks are automatically reduced, they said.
In the system, the banks can finance despite the regulator's single borrower exposure limit, some of them said.
However, some speakers said, many entrepreneurs feel discouraged to choose syndicated finance as its delivery take longer time than the bilateral loan due to various expected reasons that includes delay in approval of no objection certificate (NOC).
Discussing different other specific challenges, problems and prospects including foreign finance in Bangladesh under the structured deals, they put forward various recommendations and solutions to exploit the prospects and solve the setbacks.
 "The single borrower exposure was actually imposed to push the lenders to such syndicated finance that reduces risks," Hosne Ara Shikha, deputy general manager and deputy project director of IPFF Cell, Bangladesh Bank, said.
Such syndicated deals for large project finance will be increased in the future as more big projects are coming in the next years, he added.
He suggested the arranger to put forward the seminar recommendations to the BB so that it can take appropriate future steps.
Mr Zahir in his presentation said that the borrowers, lenders and stakeholders need to increase communication in order to develop efficient processes that can lead better management of syndicated deals.
 "Side by side of improvement of structured finance, the legal systems in the area were also developed in the country," Barrister Khan Mohammad Shamim Aziz, one of the panel discussants, said.
 "Default rate is very low in syndicate lending comparing to other loans," the lawyer said.