Final Project of Fin 433 (1)

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Non-Bank Financial Institutions &

IDLC Finance Limited

Prepared for Prepared by

Hasan A. Mamun Mohammad Hasanur Rahaman

Lecturer, School of Business Mamunur Rashid North South University. Swapan kumar Sarkar

Md. Moniruzzaman Rubel

Sabrina Humayan Upoma

Course: FIN 433

Section: 2

Date: 13 th April, 2014



Executive summary:

The main purpose of this report was to know about the different activities or function,

services and the financial condition of IDLC Finance Limited. Moreover we also include the

overall condition of Non- Bank Financial Institution in Bangladesh. We have provided our best

effort to include relevant information and analysis to make the report complete and

comprehensive. This was an exciting, very useful practical exercise and we are using the

information, compiling and producing them in report format. For preparing this report, we have

analyzed different secondary reports. After completing this report we find out services that

provided by NBFI and also know the rules and regulation they followed and their financial

position. The major part of the report is to find out the overall situation of IDLC. We find that

their main aim is to focus on quality growth, superior customer experience and sustainable

business practices. Although they initially started with Lease Financing as Their core product,

IDLC has grown to become the largest multi-product Non-Bank Financial Institution of

Bangladesh, with almost equal focus in Corporate, Retail and SME sectors. Moreover we also

find that IDLC is highly respected by their clients, peers, employees and regulators for their

strong corporate governance, statutory compliance, high ethical standards, a progressive and

enabling working environment, and strong commitment to environmental and social

development.



ContentsThe Concept of Non-Bank Financial Institution ....................................................... 1

Product and Services Provided by NBFI ................................................................... 2

NBFIs in Bangladesh ................................................................................................. 4

Profile of IDLC .......................................................................................................... 8

Board of Directors ....................................................................................................10Management Committee .......................................................................................12

Strategic objectives for 2013-14: .............................................................................14

Subsidiaries of IDLC: ..............................................................................................14

Services of IDLC .....................................................................................................15

Corporate division: ...............................................................................................17

Consumer Division ...............................................................................................19

SME Division........................................................................................................20

Roles that IDLC playing in financial market ...........................................................21

Sources of Funds ......................................................................................................23

Deposit Schemes ......................................................................................................24

Additional activities of IDLC ..................................................................................34

Performance evaluation............................................................................................36

Conclusion ...............................................................................................................39





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The Concept of Non-Bank Financial InstitutionA non-bank financial institution is a financial institution that does not have a full banking

license or is not supervised by a national or international regulatory agency. According to World

Bank data and research, a non-bank financial institution (NBFI) is a financial institution that

does not have a full banking license and cannot accept deposits from the public. However,

NBFIs do facilitate alternative financial services, such as investment (both collective and

individual), risk pooling, financial consulting, brokering, money transmission, and check

cashing. NBFIs are a source of consumer credit (along with licensed banks).

The definition provided by Bangladesh Bank encompasses only leasing and finance companies.

But there are a number of other financial institutions that are also called NBFI. The matter of fact

is that all insurance companies, merchant banks and securities houses are NBFIs.

The first non-bank financial institution was a fire insurance company established in 1680

in London named Phoenix Assurance or Phoenix Fire Office. Industrial Promotion and

Development Company (IPDC) was the first private sector NBFI in Bangladesh, which started

its operation in 1981.

Is This Concept Viable?

By specializing in certain products and services non-bank financial institution (NBFIs)

acts as a supplement bank. While banks may offer a set of financial services as a package deal,

NBFIs unbundle these services, tailoring their services to particular groups. Additionally,

individual NBFIs may specialize in a particular sector, gaining an informational advantage. By

this unbundling, targeting, and specializing, NBFIs promote competition within the financial

services industry.



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Having a multi-faceted financial system, which includes non-bank financial institutions, can

protect economies from financial shocks and recover from those shocks. NBFIs provide multiple

alternatives to transform an economy's savings into capital investment, which act as backup

facilities should the primary form of intermediation, fail.

Product and Services Provided by NBFIThe competition among NBFIs is increasing over the years, which is forcing them to

diversify to a wider range of products and services and to provide innovative investment

solutions. The product and services provided by NBFIs can be categorized as under:

1. Accepting Deposit

As it has been said deposit products of NBFIs are usually of two types.

Term Loan: As NBFIs are not allowed to maintain checking account the main deposit product is

of term loan. Maturities of these loans vary from one to five years. However maturity other than

this is also available for many NBFIs.

Deposit Pension Scheme: under this scheme deposits are accepted on a periodic basis with

equal installment. The future value is payable at the end of the period in a lump sum.

2. Financing contains-

Lease financing: Leasing facilitates the use of a fixed asset without owning it in exchange of a

series of periodic payments. There are different types of leasing that a financial institution can

provide. NBFIs usually provide capital lease, operating lease, leveraged lease, and sale and lease

back, synthetic lease, etc.



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Home loan and real estate financing : House loan and real estate financing is extended for

purchase, construction, renovation and extension of apartment & house, purchase of office space

for professionals, purchase and construction of commercial building, real-estate development for

construction of apartment project.

Bridge Finance: Bridge finance fills the gap between the need of fund and availability of fund in

the near future. It is extended in anticipation of immediate long term financing such as public

issue, private placement, loan syndication, etc.

3. Merchant Banking includes-

Issue Management: The Issue Management group is capable of devising innovative solution to

corporate clients for raising capital - debt and equity through private and public placement from

the market suiting the unique needs and constraints of the clients.

Underwriting : Underwriting refers to the guarantee by the underwriters that in the event of

under-subscription; the underwriter will take up the under-subscribed amount on pro-rata basis

upon payment of price of that option. It is done by a group of underwriters.

Portfolio Management: Merchant banks offer small investors to open investors account with

merchant banks and provide support for the purchase and sale of shares for the clients. Clients

shall have absolute discretionary power to make investment decisions.

Corporate Advising: Through corporate advising, the merchant bank helps the issuer analyze its

financing needs and suggest various ways to raise needed funds and terms and timing of issue.



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4. Securities services

Brokerage services: members of stock exchanges are allowed to provide brokerage services for

Trade Execution, Pre -IPO private placement.

CDBL services as full service depository participant (DP): Apart from the brokerage services,

securities services also provide the services like BO (Beneficial Owner) accounts opening and

maintenance, Dematerialization, Re-materialization, Transfers, Lending and borrowing, etc

NBFIs in BangladeshRules and Regulations: NBFIs were incorporated in Bangladesh under the then Companies Act,

1913 and were being regulated by the provisions contained in Chapter V of the Bangladesh Bank

Order, 1972. Currently NBFIs have been given licenses and regulated under the Financial

Institution Act, 1993. There are 31 NBFIs licensed under this act. Presently, out of 31 NBFIs, 3

are Government-owned, 10 are joint venture and the rest 18 are locally private-owned.

Meanwhile, the branch network increased to 170 as on 30 June 2013.



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Table: Structure of NBFIs

Investment Pattern of NBFIs: NBFIs are investing in different sectors of the economy, but

their investments are mostly concentrated in the industrial sector. In June 2013, NBFIs

investment in different sectors is shown in the chart.

Assets, Liabilities and Deposits of NBFIs: Asset, liabilities and Deposits of NBFIs from 2007

to 2013 are shown below in the table.



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Table: Asset, Liabilities and deposits of NBFIs

Earnings and Profitability of NBFIs: Among various measures of earnings and profitability,

the best and widely used indicator is Return on Assets (ROA) which is supplemented by Return

on Equity (ROE). ROA and ROE of all the NBFIs from 2007 to 2013 are given below.

Table: Profitability of NBFIs

Benefits of NBFIs in our Economy when we have so many Commercial Bank: The non-

Banking Financial Institutions (NBFIs) run in parallel to the traditional deposit taking

commercial banks. But they have a distinct importance in the economic growth besides bank.

They are given below.



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Mobilization of Resources: NBFIs convert savings into investment to mobilize resources of an

economy. This mobilization of resource eliminate if not, lessens the intra-regional income and

asset distribution inequalities. If NBFIs are not present in the financial system the useful

application of savings into investment might remain a dream. One striking aspect of NBFIs is

that they are usually development-oriented and not merely profit-maximizing organizations.

Provision of Long-term Credit: Commercial banks are reluctant to sanction long-term credit to

commerce and industry. This is primarily due to maturity-mismatch i.e. they are holding short-

term repayable deposits which are not comparable to long-term credit. This is where NBFIs

come into action. The large scale manicuring sector and mega infrastructure projects are largelydependent on the availability of credit from NBFIs which fosters economic development. Unlike

commercial banks, they finance corporations through equity participation also, which is a unique

feature of NBFIs.

Employment Generation: Employment generation is one of the prime objectives of any

macroeconomic policy. To achieve full employment in the economy; governments allocate huge

amounts to be disbursed through NBFIs to private sector. This inflow of funds from public sector

to private sector via NBFIs spawns business activities thus minimizing unemployment rate.

Financial Markets Development: NBFI underwrite public issues of corporations. They provide

much needed capital to new start-ups through venture capital. They are the source of liquidity in

these markets.

Specialized Credit: Some NBFIs are dedicated to a particular sector. Provision of funds to the

sectors like housing, agriculture, industry and SMEs are carried out through these. They act as a

conduit of transferring public capital to private sector.



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Profile of IDLC

Name of the Company IDLC Finance Limited

Founded 1985

Industry Type Non-Banking Finance Institution

Head office Bay s Galleria (1st Floor)

57 Gulshan Avenue, Dhaka 1212

Subsidiaries IDLC Securities Limited

IDLC Investment Limited

CEO and Managing Director Selim R.F. Hussain

Branches 26

Employees 642

Products and Services Financial instruments

Website http://www.idlc.com



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IDLC is of the largest NBFI. It established in Bangladesh in 1985 through the

collaboration of International Finance Corporation (IFC), German Investment and Development

Company (DEG), the City Bank Limited, IPDC of Bangladesh Limited, and Sadharan Bima

Corporation. As the company evolved, initial foreign shareholding of 49% was gradually

withdrawn and the last foreign shareholding was bought out by local sponsors in 2009. Although

they initially started with Lease Financing as Their core product, IDLC has grown to become the

largest multi-product Non-Bank Financial Institution of Bangladesh, with almost equal focus in

Corporate, Retail and SME sectors.

Moreover, IDLC has a significant presence in the Capital Markets. IDLC has established

two wholly owned subsidiaries, IDLC Securities Limited and IDLC Investment Limited to

provide customers with security brokerage solutions. IDLC is highly respected by their clients,

peers, employees and regulators for their strong corporate governance, statutory compliance,

high ethical standards, a progressive and enabling working environment, and strong commitment

to environmental and social development. They continue to play a pioneering role in introducing

and popularizing a variety of financial instruments suiting ever-changing requirements of its fast-

growing clients. They are continuously expanding their presence to ensure the best quality of

service to their clients at all times.

Mission Statement: We will be the best financial brand in the country

Vision Statement : We will focus on quality growth, superior customer experience and

sustainable business practices.

Goal: Long term maximization of Stakeholders value



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Board of Directors

Anwarul Huq, ChairmanChairman & CEO

Rubel Aziz Farooq Sobhan Aziz Al-KaiserDirector Independent Director Director

Meherun Haque Hossain Mehmood K. Mahmood SattarDirector Director Director



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Md. Kamrul Hassan Md. Rezaul Karim Alhaj Akram Hussain (Humayun)Director Director Director

Syed Abu Naser Bukhtear Ahmed Selim R.F. Hussain Director CEO & Managing Director



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Management Committee

Selim R.F. HussainCEO & Managing Director

H.M. Ziaul Hoque Khan Asif Saad Bin Shams M. Jamal UddinDeputy Managing Director General Manager and General Manager and

Head of Credit and Collection Head of Corporate andStructured Finance

Mir Tariquzzaman Zahid Ibne Hai Bilquis JahanGeneral Manager and General Manager and Deputy General ManagerChief Technology Officer Head of SME Division and Head of Human Resources



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Irteza A. Khan M. Ataur Rahman Chowdhury Mustaq AhammedDeputy General Manager & Assistant General Manager and Assistant General ManagerHead of Consumer Division Head of Operations and Head of Internal

Control and Compliance

Md. Moniruzzaman Md. SaifuddinManaging Director Managing DirectorIDLC Investments Limited IDLC Securities Limited



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Strategic objectives for 2013-14:

Subsidiaries of IDLC:IDLC Securities Limited

IDLC Securities Limited, a fully-owned subsidiary of IDLC, offers full-fledged

international standard brokerage services for both their retail and institutional clients. It has seats

on both Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. It is also a

Depository Participant (DP) of Central Depository Bangladesh Limited (CDBL).

Grow and develop Their talent pool

Fully leverage new core banking platform

Optimize distribution points

Grow and diversify funding sources

Grow sales and service capabilities in Consumer Division

Aggressively grow SME portfolio

Focus on top-tier clients in Corporate

Consolidate capital market operations and enhance capabilities

Embrace internationally accepted corporate governance and sustainable

business practices.



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IDLC Investments Limited

IDLC formed a s eparate subsidiary on May 19, 2010 in the name of „IDLC Investments

Limited , in order to transfer its existing merchant banking activities to the newly formed entity.

They have started its operations from August 16, 2011 to offer merchant banking services to both

their individual and institutional clients.

Highlights of the company in 2013:

Loans Taka

loans and Advances 40,941 million

Home loan 4,421 million

SME loans 10,392 million

Even in a tough economic environment, revenue per branch rose 25.32% in

2013.

Services of IDLCTo ensure steady and long term growth as well as to sharpen its competitive edge in a changing

and challenging business environment, IDLC always endeavors to diversify into other financial

services which have long term prospects. The products and services are as follows



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CorporateDivision

• Corporate Finance• Structured Finance

ConsumerDivision

• Deposit schems• Home loan• Car loan• Personal Loan• Registra loan

SME Division

• Small Enterprise Finance• Medium Enterprise Finance• Women Entrepreneur Loan• Commercial Vehicle Loan• Supplier Finance• JICA-SME Loan

Products and Services of IDLC



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Corporate division:1. Corporate finance: IDLC provide services the financial activities that related to running

a corporation. They have extensive knowledge, expertise and experience to offer a range

of financial solutions in response to the needs of a broad spectrum of clientele,

comprising of local and multinational corporate houses in Bangladesh.

Lease Financing: Asset backed financing against industrial machinery,

commercial equipments, office equipments, generators, vehicles, vessels, engines,

etc.

Term Loan Financing :

Term loan: IDLC provide long term loan to the different corporation for meeting

various regular capital/fixed expenditures like balancing of production line,

expansion of capacity and space, etc.

Bridge Financing: For meeting the funding requirements of the borrower for any

interim period and usually for shorter term.

Long Term Finance for Real Estate Developers: Financing to developers for

meeting the capital expenditures/construction costs of any specific real estate

project, for both residential and commercial purposes.

Working Capital Financing: IDLC offering working capital financing to assist

companies in carrying out day-to-day business operations.

Project Financing: They finance for setting up of a new unit as addition to the

existing product line and capacity, a new concern of an existing group, a new

Joint Venture project of an existing company, etc.



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Specialized Products:

Refinancing of Existing Liabilities: They provide money for matching the

repayments with cash flows, allowing some more time for repayment and they are

releasing working capital limits refinancing of existing good quality liabilities is

made.

Arranging Special Funds: They are also arranged money for large corporate

houses through special funds from local and international development agencies,

central Banks, Government agencies, etc.

2. Structured Finance

Structured Finance refers to the process of designing and managing complex financial

transactions to meet the unique financial needs of large corporate clients that can t be

matched by conventional financial products.

Fund-Raising: Structured Finance Department is equipped with the knowledge,

expertise and network to offer customized fund-raising services in a variety of

modes, such as foreign currency loan and syndication.

Advisory Services: They provide advises to their corporate clients such as,

Feasibility study: They are analyzing demand-supply scenario, target market,

competition, regulatory issues, technology and skills requirement, environmental

aspects etc.

Merger & Acquisition: Companies can engage in merger and acquisition

activities for a multitude of strategic and tactical reasons, but essentially to

achieve synergy by combining complementary resources.



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Securitization of Assets: They create a unique financial instrument by combining

a number of individual assets into a security. By subsequently selling off different

tiers of such repackaged debt instrument to the investors, the company gains

access to larger funding to finance its expansion projects.

Consumer Division1. Deposit schemes: IDLC Finance Limited offers a wide range of term deposit products to

meet both your personal and professional needs.

Flexible Term Deposit Package: There is a flexibility of Consumer to choose the time

of the deposit. Short term deposit 3 to 12 month and the loan term deposit from 13 to 60

months. There is also 500 days deposit schemes.

Regular earner deposit : The return will be based on specific amount of money not the

percentage. I t can be monthly or yearly based on the depositor s preferences.

2. Home loan: They offer clients the most convenient home loan facility and they sanction

the loan within the shortest possible time, and also before starting construction of the

building or purchase of the apartment. The maximum time is 20 years.

3. Car loan: They also provide loan to clients for buying a car. The maximum time for this

type of loan is 5 years . For this loan client has to earn at least TK.40, 000 monthly for

service holder, for small and medium business person and landlords TK. 50,000 and for

corporate service holder is TK. 75,000.



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4. Registraloan: It is a secured loan facility for property buyers and possession-holders for

securing ownership of apartment, commercial space and land. It is offered against the

mortgage of real estate ownership, this facility will help you manage the registration cost

of the property.

5. Personal Loan: They provide personal loan to the clients to meet their different personal

expenses such as, Purchase of consumer durables, Meeting financial liabilities, marriage,

education or medical treatment.

SME Division

1.

Small Enterprise Finance: IDLC offers financing facilities to small-scale enterprisesfor carrying out their trading, manufacturing or service business.

2. Medium Enterprise Finance: SME-Mid segment offers mid and longer term

financial solutions. Their portfolio comprises of various Limited, Partnership and

Proprietorship concerns from a wide range of prospective business sectors.

3. Women Entrepreneur Loan: This offered to small and medium business enterprises

operated by women entrepreneurs for meeting working capital requirements and/or

purchasing fixed assets.

4. Commercial Vehicle Loan: "Commercial Vehicle Loan" is a lease facility for the

purpose of vehicle purchase for commercial use. The includes these kinds of vehicles

such as Mini Truck, Truck, Covered Van, Pickup Van, Cargo, Crane and other heavy

commercial vehicle.



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5. Supplier Finance: It is short-term facility enables the suppliers/service providers to

realize the maximum that portion of the payment will get soon after the delivery has

been made to the buyer.

JICA-SME Loan: S ME Loan by JICA is a loan facility under the two-step fund, provided by

Japan International Cooperation Agency (JICA) offered to small and medium business

enterprises of Bangladesh.

Roles that IDLC playing in financial market1. Investment Banking: IDLC has a significant contribution to asset financing to capital

market in Bangladesh. In 1998, the Security Exchange commission (SEC) allowed it to

carry out investment banking. It started its operation as a investment bank through Issue

management, Issue underwriting, bridge financing and other related services since 2002.

IDLC provides comprehensive non discretionary portfolio management services

including trades execution and margin loan under its investment account called „Financial

Market Invest since early of 2005. Up to September 2011, its client s number crossed

5600 boundaries. Recently it has introduced its newest innovation of portfolio

management – „Manage Cap a BDA (Brokers Discretionary Account) type account

service.

2. Underwriting New Issues : IDLC Finance Limited started its underwriting functions

with the IPO of Premier Leasing in 2005 and the size was BDT 2,775,000. In 2005 total

underwriting was only BDT 110,225,000, whereas in 2009 it stood in 408,000,000. Total

underwriting by IDLC is BDT 932,725,000 and only in 2009 it maintains almost 44% of

its total underwriting. It is a big contribution to the market.



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3. Brokerage Services : IDLC helps in trade execution in Dhaka and Chittagong Stock

Exchange Limited. They have dedicated and skilled sales representative who will take

opportunities for trading through different financial instrument. It also help clients to

open Beneficial owner (BO)account and properly maintain it. Moreover, IDLC facilitates

dematerialization- The move from physical certificates to electronic book keeping.

Actual stock certificates are slowly being removed and retired from circulation in

exchange for electronic recording to the Center Depository of Bangladesh (CDBL) part

of the company register.

4. Internet Trading : IDLC provide internet trading facilities through three medium. Those

are described below-

a) Call Center: Interested person can call 9556661 to access their Call Center facilities.

They have professional associates will assist clients executing their trades efficiently.

b) I-trade: One can excess his/her portfolio or portfolios to manage from online

c) M-trade: By using a Java application, clients can access their portfolios they manage

in their mobile phone and enter buy/sell order from that application.

5. Portfolio Management: IDLC Investments Limited facilitates investors with two major

discretionary investment accounts – MAXCAP and Cap Invest to help them for properly

managing their portfolio.

a) MAXCAP- It is a personalized discretionary investment account designed for high

net worth clients, both individuals and institutions. Portfolio Manager, will follow a

disciplined investment process and structured approach to build clients portfolio,



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tailored to their specific needs and constraints. Minimum investment amount is 5 lac

for individual and 10 lac for corporate. There is a 2.5 % management fee, 0.35 %

settlement fees and TK. 500 is documentation fees.

b) CAP Investment- It is an Investor's Discretionary Account that provides margin loan

facilities to the investors. Minimum investment amount is TK. 1 million but not

exceeding Taka 80 Million. Less than 1 million investments have to pay 0.5 percent

more management fees. Documentation fees is TK. 500 and management fees is 1 %

for above 1 million and 1.5 % for below 1 million. Interest rate is 16.25 charged

quarterly for above 3 million and 16.50 % for below 3 million.

Sources of Funds1) Borrowings loan from other banks, financial institutions and agents: This kind of

borrowing includes several types of loan like; short-term and call loans that means the

lender may force the borrower to repay at any time. Unsecured long-term loan that also

called 'signature loans' because the institution has nothing but your signature and they

can't take possession of your house, car, or other belongings and secured long-term loans

Secured loans are covered by first equitable mortgage of all present and future

immovable properties and by floating charges on movable assets of the Company ranking

pari-passu(with an equal step) among the lenders. In 2013 total borrowing from this

sector was Tk.8,707,892,450



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2) Term deposits : This represents deposits received from institutions and individuals for a

period not less than three months period. During 2013 total term deposits were Tk.

29,163,880,082.

3) Paid-up capital: Another source of fund is paid-up capital from share holder who have

completely paid for the purchased share. IDLC has a paid-up capital of Tk.1,608,750,000

in 2013.

4) During 2013 IDLC has gather share premium of Tk.3,750,000 which been also used as

a fund of the company.

5)

IDLC have borrowed Tk.625,900,000from different affiliated companies Tk.625,900,000

Deposit SchemesIDLC Finance Limited offers a wide range of Term Deposit Products to meet both your personal

and professional needs.

Minimum Deposit Amount and Tenor Taka:

50,000 only for a minimum period of 6 months

IDLC Regular Term Deposits:



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Flexible Term Deposit Package

Term Interest Rate

3-6 months 11.00%

7 -12 months 11.00%

13 months 11.00%

14 months 11.00%

15 months 11.00%

2 Years 11.00%

3, 4 & 5 Years 11.00%

IDLC 500 Days Term Deposit

Term Interest Rate

500 Days 11.00%

IDLC Double Money DepositTerm

6 Years

IDLC Triple Money Deposit Term

9 years 10 months

Regular Earner Package:



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IDLC Monthly Earner Deposit

Term

Individual

Interest Amount per Month /

Lac

Institution


Lac

1 Year BDT 917 BDT 917

2 Year BDT 917 BDT 917

3,4 & 5 Year BDT 917 BDT 917

IDLC Quarterly Earner Deposit

Term

Individual


Lac

Institution


Lac

1 Year BDT 2,775 BDT 2,775

2 Year BDT 2,775 BDT 2,775

3,4 & 5 Year BDT 2,775 BDT 2,775

Bank Deposit Interest rate Initial Maturity Period





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Loan) 15 Years 8.75%,

20Years 8.75%

City

Shomridhdhi

(Savings

Account)

3 Years 8.50%,

5 Years 8.50%,

7 Years8.50%,

10 Years 8.50%

0

Prime Bank

Limited

Education

Savings

Scheme

Maturity Amount:

Tk. 80,000

Tk. 50,000/- 5 years

House

Building

Deposit

Scheme

(Monthly

deposit)

___________ Tk.10 lac. 5/7/10 years.

Monthly

Benefit

Tk. 800 per Tk. 25,000 5 years



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Deposit

Scheme

(Monthly

deposit)

1,00,000 per Month

Prime

Millionaire

Scheme

Maturity Amount:

Tk.10 lac.

12,810/-

monthly

5 years

Short Term

Deposit

Below Tk.1crore

3.00%, Tk.1crore &

above but below

Tk.25 crore 4.00%

- Tk. 25.00 crore &

above but below Tk.

50.00 crore 5.00%,

- Tk. 50.00 crore &

above but below Tk.

100.00 crore

5.00%., - Tk. 100.00

crore & above 5.

BDT 50,000.

Tk. 50.00 lac



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Standard

Chartered

Bank

Fixed Deposit

_______

one month to Five years.

Monthly

Savings

Schemes

Maturity Amount:

53,018

BDT. 10,000 36 months

NFCD

Account

Minimum USD

1000 or GBP

500 (for

individual

Bangladeshis),

Minimum of

USD 25,000 or

equivalent GBP

(for others).

Fund has to be present for Minimum

1 month.

One Bank

Limited

Fixed Deposit 9% _______ FDR (3 Months & above but less

than 6 months),FDR (6 Months &

above but less than 1 year), FDR (1





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glance rather than a bank. IDLC have some attractive double money deposit & triple money

deposit scheme.

Less requirement of Establishment or Account Opening Fees: In banks, there are many

formalities & around Tk.2000 is needed to open an account. This process takes time if the

depositor forgot to take the information, which was needed, by the bank. This process is time

consuming & the depositor has to pay fees to open an account. In IDLC, there are less

formalities & no fees needed to open an account.

Quick Loan facility against Deposit: In banks, if the depositor wants to take a loan they have to

put something as collateral against the loan. If the depositor wants to take a loan from IDLC,

they can easily get it against their deposit. However, this type of loan has higher credit risk but

IDLC is providing this after measuring the creditworthiness of the depositor. They do not need

any collateral.

Countrywide branch network: IDLC has branches all over the country, which can help their

customer anywhere in the country whenever they want.

Online Account Service: Banks charge specific amount fees to provide online account services.

The amount will be deducted automatically from the depositor s account after the service. On the

other hand, IDLC is doing online account services with free of cost.



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Online Fund Transfer Facility: Banks are charging a specific amount of money after every

transaction. The amount will be deducted from depositor s account. IDLC charging no fees for

online fund transfer.

Auto-renewal facility: IDLC is offering flexible auto renewal facility for the depositor.

Depositor can withdraw the principal amount without interest & principal amount with interest.

0

5000

10000

15000

20000

25000

2008 2009 2010 2011 2012

Deposit

Year

Growth In Deposit PortfolioIn Million BDT





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d) Effluent treatment plants : IDLC has put strong focus on financing effluent treatment

plants (ETPs). The adverse effect of liquid wastes from dyes and chemicals, created by

many factories can be completely eliminated through ETPs; IDLC has disbursed a total

of BDT 26 million for setting up effluent treatment plants in three RMG factories in

Narayanganj and Narsingdi.

e) Solar home system: IDLC disbursed loans amounting to a total of BDT 4.5 million for

two companies based in Dhaka. Both the companies import solar panels and accessories

required to install solar panels. One of the companies also sell solar energy efficient

Table Fans. The products are certified by IDCOL, and mostly supplied to primary dealersand partner organizations of IDCOL.

2. Research: IDLC encourages and uphold discipline in investment through rigorous

research in the investment area. Their Research coverage includes but not limited to listed

companies, sector and economy of Bangladesh. They have qualified and dedicated

professional s research team of four persons who provide insightful opinion regarding

different covered areas to facilitate people investment decision. Their footprint reached

at global village through information hubs like Bloomberg along with frequent

publications in local media

3. CSR Activities:

a) The very first step to address factors that effects climate change and environmental

degradation is mass awareness creation. In continuation of the environmental awareness

campaign across schools, IDLC conducts 2014 s session at Rajuk Uttara School &

College and Azampur Government Primary School, Uttara, Dhaka. They believe that



36 | P a g e

children are the best medium for such awareness creation considering their natural ability

to learn fast and reflect on their learning.

b) IDLC has sponsored 15 specially challenged children from SEID Trust for one year.

SEID Trust is a voluntary non-government organization working for the rights and social

inclusion of underprivileged children with physical and mental disabilities, including

autism.

c) In 2013 IDLC runs a project named “Skill s Development and Sustainable Livelihood ”

which has generated permanent employment for 20 marginal people from the most

impoverished regions of North Bengal. The project provides 3-month training to marginal people from North Bengal targeting employment in RMG sector as machine operators.

Fareast Knitting and Dyeing Industries Limited, one of IDLC s corporate clients, is

providing employment to these people.

Performance evaluationPerformance evaluation helps us to know how well or bad the firm is performing in its business.

For details view IDLC shows their performance evaluation in mainly three categories. Those are

described below-

a) Financial Performance (Taka in millions)

Particulars 2009 2010 2011 2012 2013 Growth

Lease and Term loans disbursed 3,750 4,345 8,517 12,304 16,895 37.32%

Housing finance disbursement 1,839 2,121 2,586 2,736 4,421 61.61%

Short term finance portfolio 317 468 821 581 604 3.84%

Lease Finance 4,383 4,107 4,547 5,479 6,358 16.04%



37 | P a g e

Real estate finance assets 4,789 5,605 6,979 8,262 11,170 35.19%

Total assets 21,565 25,353 29,519 35,748 48,535 35.77%

Long term liabilities 18,792 21,746 25,299 30,987 42,884 38.40%

Term deposit balance 9,780 12,373 16,828 22,008 29,164 32.51%

Net current assets 3,645 4,172 3,676 2,797 2,682 -4.10%

From financial performance analysis we can say that IDLC has a significant growth in housing

finance, lease and terms loan and then real estate finance consecutively. Though the total asset of

IDLC has a growth of 35.77%, the net current asset of the last year has decreased by 4.10% due

to increase in long term liabilities over the year.

b) Operational Performance:

(Taka in millions)


Operational income 1,497 2,186 2,043 1,955 2,574 31.64%

Operational expenses 440 673 672 822 1,022 24.36%

Financial expenses 1,619 1,818 2,359 3,088 4,127 33.67%

Profit before tax 1,273 1,394 913 1,033 1,406 36.18%

Net profit after tax 469 806 804 589 811 37.65%

Average effective tax rate (%) 48.66 42.20 41.57 42.94 42.32 -0.62



38 | P a g e

While considering Operational performance we will notice that the net profit after tax has

increased by 37.65% over the last year as a result of high operational income and reduction in tax

rate.

c) Financial Ratio:

(Taka in millions)


Debt equity ratio (Times) 10.65 8.65 8.16 8.38 9.50 13.36%

Financial expenses coverage ratio (Times) 1.79 1.77 1.39 1.33 1.34 0.47%

Current ratio (Times) 1.04:1 1.39:1 1.31:1 1.21:1 1.14:1 -5.78%

Return on total assets (%) 2.44 3.43 2.93 1.81 1.92 0.12

Nonperforming loan ratio (%) 3.43 2.84 2.32 2.09 1.63 -0.46

Return on shareholders equity (%) 28.65 35.99 27.51 16.76 19.24 2.48

Earnings per share* 2.91 5.01 5.00 3.66 5.04 37.65%

* Prior years number of shares have been adjusted to reflect Bonus share issued in 2012.

Negative current ratio of financial ratio table tell us that the current liabilities of IDLC s is

increasing more quickly than current asset of the company and the company are not capable of

covering its current liabilities through current assets. On the other hand, the rate of earning per

share has increased by 37.65% in the last year though the company has adjusted bonus share of

2012



ConclusionOver the last three years, IDLC has consistently grown both client deposits and loans at a

significantly faster pace than the average of the country s banking and FI industry. This growth

strategy will continue as we further leverage new technology and processes while refining their

product focus. They plan to grow their branch network to cover much more of the country every

year and intend to diversify into new products, sectors and geographies. They have almost

trebled our financing in the SME, Consumer and Corporate client segments in the last four years

and will continue this growth rate - expecting to reach an asset base of Taka 100,000 million or

USD 1.25 million by 2017.

References

1. Nasrin, R. And Islam, T. (2014), Equity on IDLC Finance.

http://www.ilslbd.com/research_reports/Equity%20Note%20on%20IDLC%20Finance%2

0Limited.pdf .

2. Products and services (2014). http://www.idlc.com/producta_services.php .

3. Dhaka Stock Exchange (2014), Company Information, Available:http://www.dsebd.org/displayCompany.php

4. Annual report of IDLC 2013,2012,2011.Available from: www.idlc.com

5. Sustainability report 2013, 2012, 2011. Available from: www.idlc.com

http://www.ilslbd.com/research_reports/Equity%20Note%20on%20IDLC%20Finance%20Limited.pdf



http://www.idlc.com/producta_services.php



http://www.dsebd.org/displayCompany.php


http://www.idlc.com/












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