Marketing Strategy of Financial Institution of Bangladesh: IDLC Finance Ltd.

Executive Summary

There can be various types of financial institution in an economy. Depository and non depository are the common divides. Among non-depositories, there are insurance companies, leasing companies, investment bank and companies and pension fund.

But our selected company IDLC is a special type of company. It is a multi product company with various wings. It provides various types of financial services. It has very enriched leasing operation along with strong merchant banking operation. Actually it is not a suddenly established so called finance company. It has strong commitment to meet the demand for loan able fund and strengthen the capital market of the country.

That’s why we feel that stating its background is very important. After a brief introduction we discuss about the background of the company. After a short discussion about its overall business activities we directly go to our main concern, leasing and merchant banking activities of IDLC. There we discuss about its various products, terms and condition, contribution of this activities to parents companies.

From our study we get some information that amused us. As a leading leasing company it is easy to predict that it will be very successful. But as a merchant bank it is playing a very important role in building our economy. This a very important time for our capital market when most of the countries in the world is in recession. Strong merchant banking companies like IDLC can help to overcome this situation.

 Introduction

We have very keen interest on financial intermediaries and their activities. They are the channel between deficit and surplus business unit. Industrialization is the prerequisite for development and it always requires huge capital investment. No single business unit is able to meet the demand of all the organization. Only cumulative fund collected from all the people who has surplus can meet this huge demand. And financial intermediaries are performing this important duty of gathering this fund. Our present concern IDLC finance is one of these intermediaries. But its importance is more than others because it is simultaneously playing the role of various finance companies and thus contributing to the development of the country as a supplier of loanable fund and more importantly, as a market maker. That’s why we have decided to prepare this report on IDLC.

Origin of the report:

 This term paper is a course requirement of “B-203 Bank Marketing”. Our honorable course instructor Md Ariful Islam assigned us the topic and the report was conducted on IDLC finance Ltd. We are very glad to have his suggestion and guidelines in this regard. The report mainly focused on the leasing company’s functions, source of fund, investment and rules and regulation regarding leasing company. But as capital market is one of the highest concerns of today’s financial institutions, we also focus on the capital market activities of the firm.

 Objectives of the report:

The main objectives of the report are given below:

Ñ     To understand the financial institution’s overall activities through the market.

Ñ     Gather some practical knowledge on different financial companies’ activities.

Ñ     Thinking about the present course of action relate with the present condition.

Ñ     Point out leasing activities performed by IDLC.

Ñ     Capital market activities of IDLC.

1.4           Data source:

The main sources of data are as follows:

The data on lease finance and merchant banking and lessee compatibility were collected from the organizational visit to the IDLC’s corporate office.

The company information and other related information which are given on the repot were collected from the monthly business review and the annual report of the company.

1.5           Time period:

The time period covered in the study is for the period 2012.

 1.6           Limitation:

The major limitations that the study faced were as follows:

Getting the internal data of the company for the recent period is difficult. Because of most of the organizations don’t want to share their information with outsider.

The analysis required complete information about all kinds of product. But the necessary data on all products at the same period were not available.

Some of the necessary assumptions that were theoretically given were not at all consistent with the general practice.

The lack of knowledge and the depth of understanding might have hindered our ability to produce an absolutely authentic and meaningful report.

This kind of study requires more time. So the constraint of time was a major limitation.

Background

IDLC Finance Limited was established in Bangladesh in 1985, as the first-ever leasing company of the country, through the collaboration of IFC, German Investment and Development Company (DEG), Kookmin Bank and Korean Development Finance Corporation, the Aga Khan Fund for Economic Development, the City Bank Limited, IPDC of Bangladesh Limited, and SadharanBima Corporation. As the company evolved over the years, the foreign shareholding gradually moved out and the last foreign shareholding was bought out by local sponsors in 2009. IDLC’s strong focus on revenue diversification has led to the establishment of different client segments in the Corporate, Retail, SME and Capital Markets of Bangladesh. The current product portfolio consists of Corporate and Structured Finance solutions for local and multinational corporate houses; Personal fi nuancing products such as deposits, home loans, car loans, personal loans etc.; financing facilities for Small and Medium Enterprises; Merchant Banking solutions such as Portfolio Management and Investment Banking (IPO,RPO, Bond Issuance, Rights Shares Offering etc.); and Brokerage services.

With this diversified array of products, IDLC Finance Limited is at present the largest multi-product Non-Bank Financial Institution in Bangladesh, having two wholly-owned subsidiaries, IDLC Investments Limited and IDLC Securities Limited for carrying out its capital market operations. The Group is represented by over 609 employees working in 26 branches in the major cities of the country.

IDLC is highly respected by its clients, peers, employees and regulators for its professional pool of resources, its progressive and enabling work environment, and its strong ethical practices. With significant growth in its business and profit over the last few years, the company has consistently demonstrated exemplary corporategovernance and strict statutory compliance, and is a standard bearer in this regard in the financial sector of Bangladesh.

Moreover, starting from 2010, its silver jubilee year, IDLC has decided to step up its commitment to sustainable business practices, with particular focus on environmental and social development. It has subscribed to a number of leading local and international sustainability initiatives including the Bangladesh CSR Centre, the UN Global Compact (UNGC) and the UN Environment Programme Finance Initiative (UNEP FI), and IDLC is the first company to become a member of UNEP FI from Bangladesh. As part of this commitment, IDLC is now active in promoting responsible practices among its stakeholder groups, mostly its employees and clients, while it is streamliningits own policies and practices to emerge as a truly responsible brand.

Subsidiaries

IDLC Securities Limited (IDLCSL)

IDLC Securities Limited, a fully owned subsidiary of IDLC, offers full-fledged international standard brokerage service for 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).

IDLC Investments Limited (IDLCIL)

As required by the Bangladesh Securities & Exchange Commission (BSEC), the Company formed a separate subsidiary on May 19, 2010 in the name and style “IDLC Investments Limited” to transfer its merchant banking activities. The Company obtained license from BSEC on August 02, 2011 and commenced its business on August 16, 2011. The main businesses of the company are portfolio management, issue management, underwriting of securities and advisory services.

Company Information

A public limited company incorporated in Bangladesh on May 23, 1985 under the Companies Act 1913 and listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited on March 20, 1993 and November 25, 1996, respectively. The Company licensed as Financial Institution under Financial Institutions Act, 1993 on February 7, 1995.

Company Registration No.

C 14218/1992 of 1984-1985

Bangladesh Bank License No.

BCD (Non-banking)/Dhaka/2/1995

Tax Identification Number (TIN)

210-200-1222/LTU/Dhaka

VAT registration Number

9011043908

Registered Office

Bay’s Galleria (1st Floor)

57 Gulshan Avenue, Gulshan 1

Dhaka 1212, Bangladesh

Tel: +880 2 883 4990 (Auto Hunting)

Facsimile: +880 2 883 4377, 8835887

Corporate Website

www.idlc.com

Email address:

mailbox@idlc.com

Auditors

HodaVasiChowdhury& Co.

Chartered Accountants

BTMC Bhaban (Level 8)

7-9 KaziNazrul Islam Avenue

Karwan Bazar C/A, Dhaka 1217

Principal Bankers

Standard Chartered Bank

Citibank N.A.

Major Stock Brokers

IDLC Securities Limited

LankaBangla Securities Limited

BRAC EPL Stock Brokerage Limited

Multi Securities Limited

Memberships

Associations

Bangladesh Leasing & Finance Companies Association

Asian Financial Services Association

Bangladesh Merchant Bankers Association

Bangladesh Association of Publicly Listed Companies

Institute

The Institute of Bankers, Bangladesh

Chambers of Commerce & Industry

International Chamber of Commerce - Bangladesh

Metropolitan Chamber of Commerce & Industry

Dhaka Chamber of Commerce & Industry

Bangladesh German Chamber of Commerce & Industry

The Federation of Bangladesh Chambers of Commerce and Industry

Sustainability initiatives/ partners for sustainability

UN Global Compact (UNGC)

UN Environmental Programme Finance Initiative (UNEP FI)

CSR Centre

International Memberships

International Factors Group (IFG) - an International association of factoring companies

Small Business Banking Network (SBBN) - a global initiative to improve access to financial business by small businesses

Registered Name of the Company

IDLC Finance Limited

IDLC’s Vision, Mission and Strategic Objectives

IDLC is committed to sustainable development by creating long term value - value for their shareholder, value for the environment, value for the community.Theirsustainability focus is not based only continued financial performance but also on good corporate governance, strict compliance and highest ethical standards; meeting stakeholder rights and expectation; better environmental performance; community empowerment through their strategic decision and business activities. They have specific commitment and objectives against each of these areas, constituting a vital part of their journey towards a sustainable future.

Their Vision

They will be the best financial brand in the country

Their Mission

They will focus on quality growth, superior customer experience and sustainable business practices

Strategic Objectives

􀁑 Grow and develop their talent pool;

􀁑 Fully leverage new core banking platform;

􀁑 Optimize distribution points;

􀁑 Grow and diversify funding their resources;

􀁑 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.

Products and Services

IDLC Finance Ltd provides product and service through these divisions:

1. Corporate division;

2. Consumer division;

3. SME division;

4. Capital market.

Corporate Division:

Corporate Finance

We 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. In this Finance IDLC provide:

v Lease Financing

v Term Loan Financing

v Working Capital financing

v Project Financing

v Specialized Product

 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. These Products are:

v Fund-Raising

v Advisory Services

v Securitization of Assets

Consumer Division

Deposit Schemes

You can now earn more with our various attractive deposit schemes. IDLC Finance Limited offers a wide range of Term Deposit Products to meet both your personal and professional needs. These are

       I.            Flexible term deposit package

    II.            Regular earner package

Key Features and Benefits:

v Flexibility of tenors

v Competitive interest rates/profits

v No requirement of Establishment or Account Opening Fees

v Auto-renewal facility [with or without interest]

v Dedicated Relationship Manager(s) to provide customized services at your doorstep

General Terms and Conditions:

Minimum Deposit Amount and Tenor
Taka 50,000 only for a minimum period of 6 months

Mode of Payment for Deposit Placement
A Cheque or Pay Order in favor of ‘IDLC Finance Limited’

 Home Loan

 As one of the leading Home Loan providers in the country, we offer you the most convenient Home Loan facility to suit your needs. With so many attractive benefits, the home you always wanted is no longer a dream.

They can also avail other Home Loan services:

·        Home loan for NRB

·        Construction loan

·        Home loan shield

·        Registrar loan.

Key Benefits:

v We consider all applications equally, irrespective of any profession

v We provide a dedicated and supportive service both before and after the disbursement

v You have the option to choose either Fixed or Variable rate of interest

v We sanction the loan within the shortest possible time, and also before starting construction of the building or purchase of the apartment

v You can have early pre-payment option, either in part or full, with convenient conditions

v You can avail Income Tax Rebate on annual interest payment on Home Loan up to Taka 20 Lacs.

v You can avail Municipality Holding Tax rebate

v We offer maximum loan facility to Non-resident Bangladeshi (NRB)

Availability of Home Loans:

v For purchase of apartment/house/commercial space/approved housing plots

v For construction of residential/commercial buildings

v For renovation or extension of residential complex

v As Home Equity loan against mortgage of property

Eligibility:

We are eligible for our Home Loan facility if you are:

v 25 years and above of age, but not more than 60 years, except professional

v Earning on a regular basis from a sustainable source of employment or business

Car Loan

In today’s age, owing car is no longer considered a luxury; rather it has become a vital part of our everyday life. A car is now a useful investment that improves your quality of life.

Scope:

Our facility is to help you purchase brand new and/or reconditioned vehicles

Benefits:

v Faster service

v Competitive interest rates

v Maximum possible loan amount

v No hidden charges or fees

v No Personal Guarantee required

Personal Loan

We understand your all out efforts to improve the quality of life, but necessities no longer wait for your savings to accumulate. We understand your all out efforts to improve the quality of life, but necessities no longer wait for your savings to accumulate. Sometimes, it gets harder to meet ever changing needs. IDLC Finance Limited, the largest financial institution of the country, can help you achieve your aspirations with a Personal Loan that is suitable for you. IDLC Personal Loan - financing for all your need!

IDLC is your first choice for availing personal loan because they provide you:

v Faster loan approval

v competitive interest rate

v Lowest possible charge

v Early settlement option.

Online service

 By availing our Online Account Service, our depositors and borrowers can receive any of the following documents/services completely free of cost:

v Tax certificate

v Balance certificate

v Account statement

v Cheque inventory status

v Loan top-up request.

SME Division

 Small Enterprise Finance

 IDLC offers financing facilities to small-scale enterprises for carrying out their trading, manufacturing or service business. Moreover, financing facilities for developing commercial real estate can also be availed by such enterprises. Moreover, financing facilities for developing commercial real estate can also be availed by such enterprises.

SME Loan

 SME Loan is a facility designed to finance small-scale trading, manufacturing and service ventures to help them meet short-term cash flow needs and bridge the fund-flow gaps.

ABASHAN Loan

 "ABASHAN" is a loan facility extended to small businesses that will construct or already have permanent structure for commercial rent (popularly known as mess rent), that are located in places surrounding the industrial areas and EPZs across the country.

Medium Enterprise Finance

SME-Mid segment offers mid and longer term financial solutions to a wide range of clienteles who are in their journey to emerge as promising corporate houses in near future. Our portfolio comprises of various Limited, Partnership and Proprietorship concern from a wide range of prospective business sector. ILDC also provide

v Lease financing

v Term loan financing

v Working capital financing

v Project financing

Supplier Finance

 Supplier Finance is a revolving financing facility offered against receivables created due to supply of goods or delivery of services on credit.

Women Entrepreneur Loan

 Women Entrepreneur Loan is a loan facility offered to small and medium business enterprises operated by women entrepreneurs.

 Commercial Vehicle Loan

“Commercial Vehicle Loan" is a lease facility for the purpose of vehicle purchase for commercial use.

Capital Market

 Portfolio Management

 IDLC offers Portfolio Management services to both individual and institutional investors through our subsidiary, IDLC Investments Limited. Investors can avail our services through our major discretionary investment accounts – MAXCAP and Cap Invest.

MAXCAP

MAXCAP is a personalized discretionary investment account designed for high net worth clients, both individuals and institutions.

Cap Invest

Cap Invest is an Investor’s Discretionary Account that provides margin loan facilities to the investors.

 Investment Banking

With a rich experience in Investment Banking, we assist our clients to our best throughout the IPO process, along with sustained market support. With a rich experience in Investment Banking, we assist our clients to our best throughout the IPO process, along with sustained market support. Our core strength lies in

v Correctly positioning the company in the financial market to procure the right profile of institutional and retail investors

v Valuation of the enterprise

v Showcasing the enterprise to the right investors

v Optimum pricing of the companies

v Devising the best financial structure, and

v Completing the entire process smoothly and efficiently, leveraging our strong co-ordination with regulatory authorities.

Marketing Strategy

In order to respond to the opportunities and challenges of the marketplace most organizations engage in a process of strategic planning. Strategic planning has been defined as a process that describes the direction an organization will pursue within its chosen environment and guides the allocation of resources and efforts.

To develop an effective stragic plan an organization mult define its mission, second it must conduct a situational assessment of the threats and opportunities to which the organization can respond in light of its mission. Last the organization must establish a set of priorities based on organizational objectives that align with the mission. Once these steps have been taken, the organization can then determine which strategies to pursue when competing in the broader market.

 

                   

Overall Strategic Plan
Business Plan Service A	Business Plan Service B	Business Plan Service C
·        Financial Plan ·        Personnel Plan ·        Operational plan ·        Marketing Plan	·        Financial Plan ·        Personnel Plan ·        Operational plan ·        Marketing Plan	·        Financial Plan ·        Personnel Plan ·        Operational plan ·         Marketing Plan