IPDC plans to increase loan portfolio to Tk 110 billion

Country's leading financial institution IPDC is looking forward to expanding its focus on consumer and SME as part of its five-year growth strategy.

The expansion is in line with the country's shifting socioeconomic needs, said Mominul Islam, Managing Director of the company, said this recently during an exclusive interview with the FE.

"We plan to increase our loan portfolio to Tk 110 billion in next five years," he disclosed.

Asked to detail, he said, "Around 50 per cent of that loan portfolio will be targeted at the consumers, 30 per cent will be catered to the industries while the remaining 20 per cent will be served to small and medium entrepreneurs."

Since its journey in 1981, IPDC has been playing a lead role in financing some of the country's biggest corporate houses like Square, ACI, Transcom and Pran throughout its formative years and as such the company has been instrumental in the country's industrial development from 1980s onward.

The company, however, in recent times has been trying to focus on consumer and SME segments in line with the shifting socioeconomic needs of the country.

"Back in 1980s, private sector industrialization was the dire need of the country as local entrepreneurs did not have adequate capital and technological know-how. IPDC, during that time, played a lead role to fill in that gap," Mominul said.

"However, with the course of time, the areas where the country needs more financing have changed," he said, adding, "Keeping that in mind, affordable housing, women empowerment and employment generation will be our strategic priorities for the next five years."

The IPDC top boss said one of the biggest chunks of the company's consumer loan portfolio will be aimed at financing affordable housing across the country that will also include the suburban areas.

"At present, much of the country's real estate growth centres around Dhaka and Chittagong. Even in those two mega cities, only the very wealthy families can actually afford to buy a house," he said.

"But beyond that, there are millions of middle and lower-middle income families across the country for whom owning a house is a distant dream due to lack of appropriate financing schemes," he viewed.

"Keeping that in mind, home financing will be our key priority. And by saying that, we do not mean financing expensive homes for the wealthy segment of the population - rather affordable housing across the country for the underserved people," said the IPDC CEO.

He said that his company's home financing scheme is also unique in the sense that it is looking to offer a complete package to customers in collaboration with all the market players involved in the real estate development.

"For that, we will be collaborating with the steel makers, cement makers, construction firms, architecture firms and hardware retailers so that our customers get discounted offer at every stage," Mominul said.

"We will also make sure that our home financing scheme has a built-in insurance coverage without any additional cost on part of the customer," he added.

The company has shown some strong business performances in various key indicators since Mominul's appointment as the Managing Director of IPDC in 2012.

"When I joined the company back in 2006, the portion of our nonperforming loan (NPL) was 37 per cent. Even, when I took over as MD back in 2012, it was 19 per cent."

But now, he said, the share of NPL is less than one per cent which is one of the lowest in the market.

"We have recorded growth of our business by two and half times in 2016 alone," the IPDC chief said, adding, "Last year, we had a Tk 6.3 billion loan portfolio which have now increased to Tk 17 billion."

Riding on this 'phenomenal' growth, the company has now embarked on a five-year-long strategy to expand its focus on various segments, a significant part of which strategy is re-branding.

As part of its re-branding process, the company has recently opted for a new name - IPDC Finance Limited - which is a spin-off of the acronym of its old name 'Industrial Promotion and Development Company of Bangladesh.'

The name has already been approved by the IPDC Board as well as the central bank and will be officially put to use after some due legal formalities.   

Noting that currently, only 3.4 percent of the country's SME loan is catered to women, the IPDC MD said that his company will also have a special focus on women empowerment in the coming years as the company is looking to position itself as a 'women sensitive financial institution'.

"In terms of financial asset or housing, our company would offer a special discount if the property is registered in the name of wife. Similarly, when a woman opens a deposit with IPDC, she will get a higher interest rate",  Mominul said.

In addition, the company is also looking to support the development of entrepreneurship among the younger generation in collaboration with various universities through providing necessary training, connecting young entrepreneurs with various forums and providing them with financing.

In a bid to reach more customers across the country, IPDC plans to expand its network through setting up of more branches.

"Currently, we have five branches while three more branches in Gazipur, Narayanganj and Bogra will be opened by November," the IPDC boss said.

"We have also applied to the central bank for eight more branches and we plan to open ten more branches by next year. In collaboration with BRAC, we are contemplating to make our financial products available at BRAC centers across the country by next year," he said.

"In five years," he said, "we want to have hundreds of our own offices as well as 300 points across the country where our financial products will be made available," he added.

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