Consumer Division of Industrial Development Leasing Company Finance Limited

Consumer Division of Industrial Development Leasing Company Finance Limited

In the course of the past 30 years the IDLC group has become the biggest multi-product multi segment Non-banking financial institution in Bangladesh and one of the blue chip companies on local stock markets. The single product leasing which started in 1986 with five staff members has today evolved into a multi-product $750 million business which has diversified into the corporate, SME, Retail and capital market segments. IDLC is today represent out of 31 branches and booths in 15 cities with over 1,200 staff.

The Company is committed to sustainable practices and strong financial performance. IDLC has been consistently recognized by independent bodies for the values underpinning its business and is proud to be a standard bearer for the Bangladesh financial sector. The IDLC committed to upholding the highest standards of ethics and compliance by its employees.

Each employee follows the Company’s code of conduct. IDLC is involved with lots of CSR activities.

Since 2011, the IDLC group has embarked on a journey to grow its capabilities and become larger and better than ever. They launch new technology, new products, new branch, new sales, Channels etc. In 2014 the Company began leveraging these investments and seriously stepped up business.

Methodology

I have followed two kinds of methodology for the arrangement of the report. The two ways in which I have collected information:

Primary Data:

I have collected this data with the help of a company supervisor, talk directly with the consumers also discuss with national sales team and consumer division, technical team and SME.

Secondary Data:

My secondary method of data collected from different sources. Those are:
Go through the websites.
Annual reports of IDLC finance limited.
Different books, journals and newspapers.

Company Overview

IDLC (Industrial development Leasing Company) Finance Limited was established in 1985 as a joint venture public limited company with the multinational collaboration of International Development Finance Institution, Commercial Banks, Insurance Company and Foreign Leasing Corporation. Technical assistance was provided by Korea Development Leasing Corporation (KDLC), the largest leasing company of the Republic of South Korea. In 1995, IDLC was licensed as a Financial Institution by the country’s central bank, Bangladesh Bank, following the enactment of the Financial Institution Act 1993. During the last two and a half decades, IDLC has grown in tandem with the country’s transition into a developing country and has emerged as Bangladesh’s leading multi-product financial institution. To encapsulate the evolving nature of the company, IDLC has changed its name to IDLC Finance Limited from earlier Industrial Development Leasing Company of Bangladesh Limited in August 2007.During the past twenty six years of its operation, IDLC has played a catalytic role in providing alternative source of term and capital asset financing to the private sector. IDLC’s primary focus has been in the area of 3-5 year term financial leasing with particular emphasis on balancing, modernization, replacement and expansion of existing units.

With its pioneering vision IDLC has not only established lease financing as an efficient and quality financial service but also laid the foundation for the creation of other leasing companies.

Today lease financing has grown to be a promising industry. IDLC and its institutional shareholders have upheld their commitment towards the development of the financial service sector by offering high quality service to local entrepreneurs. To ensure steady and long term growth as well as to sharpen its competitive edge in a changing and challenging business environment. Since 1985, when IDLC was formed as the pioneering leasing company in

Bangladesh, the company has continued to evolve as an innovative financial solutions provider.

IDLC is now able to offer its customers, integrated and customized financial solutions – all under one roof. The Company’s wide array of products and services range of retail products, such as home and car loans, corporate and SME products including lease and term loans, structured finance services ranging from syndications to capital restructuring and a complete suite of investment banking and capital market services.

History of IDLC Finance Limited

23rd May 1985, the IDLC of Bangladesh Limited was consolidated as a joint venture public organization with the multinational cooperation of five foreign and three local money related establishments. Presently, IDLC is one of the main twenty organizations in the nation with various product offerings. The organization has approved capital of BDT 1,000,000,000/ – (10,000,000 shares of Taka. 100 each) and paid up capital of BDT 200,000,000/ – (2,000,000 conventional shares of BDT 100 each).

The organization plotted its vital center for administration expansion in 1994 by launching its deposit schemes. In 1997, IDLC presented Real Estate Financing and Short term Financing. Amid the time of 1998 and 2006, the organization widened its exercises into the ranges of corporate financing, underwriting, issue management, syndication and other speculation managing an account related administrations and advanced as a genuinely multi item money related establishment.

Products and Services

IDLC 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.

Corporate Finance

Lease Financing: Asset backed financing against industrial machinery, commercial equipment’s, office equipment’s, generators, vehicles, vessels, engines, etc.
Working Capital Financing: IDLC offering capital financing to assist companies in carrying out day-to-day business operations.
Specialized Products: For matching the repayments with cash flows, allowing some more time for repayment, releasing working capital limits.
Term Loan Financing: for meeting various regular capitals/fixed expenditure’s like balancing of production line, modernization of the manufacturing process, expansion of capacity and space etc.
Project Financing: For setting up of a new unit as an 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.

Consumer division

Deposit Schemes: Consumers can now earn more with IDLC’s various attractive Deposit Schemes. For individual accounts, woman clients will avail .10% higher interest rate on regular term deposits and regular earner products. If the client have e-tin certificate, then 10% tax will be deducted from the interest rate otherwise if the client did not have e-tin certificate in that case 15% tax will be deducted from inters rate. If the consumers want to withdraw the money at that point he/she need a permission paper from Bangladesh bank. However, interest rates are subject to change at any time without notice. Excise duty and advance income tax are applicable as per government laws.
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 the quality of life. IDLC separate their consumers in different segments.
Home Loan: As one of the leading Home Loan providers in the country, IDLC offers the most convenient Home Loan facility to suit Consumer’s needs. With so many attractive benefits, Consumers dream can come true now.
Personal Loan: IDLC understand consumers all out efforts to improve the quality of life, but necessities no longer wait for your savings to accumulate.
Registrar Loan: “Registrar Loan”, the first loan of its kind in Bangladesh, is a secured loan facility for property buyers and possession-holders for securing ownership of apartment, commercial space and land.

SME

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.

Medium Enterprise finance: SME, mid segment offers mid and long term financial solutions to a wide range clienteles who are in their journey to emerge as promising corporate houses in near future.

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

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

Women Entrepreneur Loan: Women entrepreneur Loan facility offered to small and medium business enterprises by women entrepreneurs.

JICA-SME Loan: SME 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.

Organization Vision and Mission

Vision

We will be the best financial brand in the country.

Mission

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

Strategic Objectives:

Grow and develop talent pool
Fully leverage the new core banking platform
Optimize distribution points
Grow and diversify funding sources
Grow sales and service capabilities in the consumer division
Aggressively grow SME portfolio
Focus on top-tier clients in the corporate segment
Consolidate capital market operations and enhance capabilities
Embrace internationally-accepted corporate governance and sustainable business practices.

Core values:

Integrity
Customer focus
Trust and respect
Equal opportunity
Eco-friendly
Passion
Simplicity

Analysis Consumer Buying Process Model –

Need recognition:

The need recognition is the first and most important step in the buying process. This recognition occurs when there is a leg between the consumer’s actual situation and the ideal and desired one. However, not all the needs end up as a buying behavior. It requires that the leg between the two situations is quite important. Such as When Consumers need to purchase a car or apartment, it’s not always possible for consumer’s to give the full amount money. Consumers need some money in that case they take loans from Banks and NBFI. IDLC help those people make their dream come true. IDLC provides all kinds of loans. Car loan, home loan, personal loan, SME.

Suppose one consumer needs money to expand his or her business. According to these needs IDLC have SME department. This department is mainly deals with all kinds of business loans or entrepreneur loans. In another example, if the consumer wants to buy a car because of transportation, but he’s not able to purchase the car since he did not have the money. In that case IDLC provides car loans with very fast services. He can get the loan within 3 or 4 days. There are other types of consumers in IDLC Finance Limited.

Those consumers deposit their money in here. The reason behind this is IDLC delivers competitive interest rate rather than other banks and NBFI. Consumers also trust this Organization. IDLC products and service design according to their consumers. Agreeing with this IDLC offers personal loans. There are different types of consumers in personal loans such as there are some consumers who need money for education or marriage or medical treatment or foreign travel. Keeping all these needs in minds IDLC delivers personal loans for this kind of consumers.

Information search:

Once the need is identified, it’s time for the consumer to seek information about possible solutions to the problem. He will search more or less information depending on the complexity of the choice to be made but also his level of involvement.

When consumers need any kind of loans he/she is looking for options. Now a days there are lots of option for consumers because of many Banks and BNFI. Then consumer collects the information from all those banks and NBFI.

There are two kind of information.

Internal information: This information is already present in the consumer’s mind. It comes from previous experience, for example, consumers have already taken the loans from IDLC finance ltd. As a result he knows about the products and services about the IDLC. There’s one consumer who takes home loans from IDLC finance in 2005 for 10 years. He successfully gives the loan money without any problems. Now he came to IDLC once again. Wants home renovation loans for interior design for his homes. So this came in his mind because of his previous experience. This is one way consumer can find information. There some other example too such as one consumer who takes loan for his business purpose from IDLC Finance ltd. is now interested to take car loan from here.

External information: This is information on a product or brand received from and gained by friends and family. There are other sources too such as advertising or sellers speech. Suppose one consumer take loans from IDLC. He can easily suggest others to take the loan from IDLC. This thing happens many times in IDLC exiting client from IDLC advice other to take the loan from them. Employee of IDLC Finance limited also suggested their friends and family to take loans from here. During my internship time I have seen so many cases just like that.

Alternative evaluation:

Once the information collected, the consumer will be able to evaluate the different alternatives that offer to him, evaluate the most suitable to his needs and choose the one he think it’s best for him. In this case IDLC offer different packages to their products. This helps consumers to select the right choice. Such as IDLC offers both variable and fix interest rate which is good for consumers. Variable interest rate means suppose consumers take home loans from 11.80% interest rate.

This rate can be change by the government. Maybe it will increase or decrease it all depends on Bangladesh Bank. But a fix interest rate is a type of loan or mortgage for which the rate of interest dose not fluctuates over the life of the loan. This are the package or alternative consumer can evaluate in here.

Purchase decision:

Now the consumer has evaluated the different solutions and products available to respond to his need, he will be able to choose the product or brand that seems appropriate to his needs, proceed to the actual purchase itself. After collecting all the information then consumer come to a decision. Before Purchase a product consumers have lots of opportunity, finally he/she choose the best one that suite him/her the best. For example one consumer wants to buy a car therefore he needs a car loan. He is a segment A consumer. He is a general manager of multinational company. He has lots of other options too. IDLC offers loans to segment a consumer at a rate of 13% interest rate. Other financial companies also offer the same interest rate. This becomes a dilemma for this consumer. But when the consumer started to evaluate the offer he sees that IDLC take 1.5% Processing fees which is clearly mentioned in the form on the other hand other financial Institution take much more higher processing fees as well as other hidden cost. So at the end of the day He took a loan from IDLC Finance Limited.

Post-purchase behavior:

Once the product is purchased and used, the consumer will evaluate the adequacy with original needs. And whether he has made the right choice in buying this product or not. In this case IDLC provides better service because many circumstances we can see that existing client require more loans therefore without a good service consumers will not be interested to take loan from.

SWOT Analysis –

Strengths:

Brand Image: IDLC is well-reputed company and create a positive impression among the consumers. IDLC has established the strength resilience of its business model and delivered a strong performance in the year 2014 in the current market condition. They are growing their business in every year which place them very robust position.
Board of director: The board of director of IDLC is very influential. All of them have a resilient image plus also have strong background around this country. They are very dedicated in this organization. The member of the board mainly setting out its objectives, responsibilities, structure and operation.
Strengthen prudence in decision and efficiency in their operation: They retain strong funding, capital and liquidity positions at all times and committed to continue their loan portfolio quality.
Keep track on consumers: IDLC keep track on their consumers in that way in the future if they want any kind of loan, they can have the loan very fast. They basically create a bond between consumers and with the organization.
Effective manpower: This is one of the major strengths in IDLC. Most of the employees are very efficient in their work. The Employee can create his or her creativity in accommodating a customer. Another important fact is that if employee leaves the organization that creates a gap in that particular position but in case IDLC can handle the situation on very effectively, if anybody leave the organization one another can easily replace the position.
Training: IDLC provides effective training to their employee. In a year they arrange five or six training season. So that it will help them to improve their performance.
Service: IDLC increasing their performance each year because of their fast service. IDLC provides hassle free service. There is no hidden cost. All the cost is visible. So that customers can have the idea about their cost. On the other hand other bank and NBFI (non-banking finance institution) skin some of the hidden costs.

Weakness:

Communication gaps: this occurs between consumer division and CRM (Credit risk management). The connection between two divisions sometimes is not that good. As a result it creates a gap between two divisions. Therefore this is one of the softest that IDLC have right now. Eventually recently management takes any necessary decision which will ultimately help them to associate each other and work as a same force.
Change in management: In recent times there is a huge change in management. As a result there will be some change in the organization. Consequently employee takes some time to adopt the change.
Diversification: Sometimes diversification of product and services can damage the focus on the core services in the organization.
High Cost: The strongest part of this organization is manpower. Occasionally it can be weakness of this organization the reason behind this is, to maintain this large amount of employee they have to spend large amount of money. So this can be another weakness in this organization.

Opportunity:

Capturing new geographic areas: there is a huge prospect for this organization. Day by day consumers are increasing as well as their demands too. Subsequently, expanding the business which will create an enormous opportunity for this organization. IDLC already started their process and started planning how to expend the business.
Local Bank Inefficiency: local banks are unable to give the consumer what they need. Which is good for NBFI because it’s create an opportunity.
Growing Consumers demands: now-a-days people are more interested to take loan such as apartment loan, car loan etc. As a result the demands are increasing rapidly. Which create a big opportunity for IDLC.
Foreign investment: In recent days foreign investment in the numerous prospective sectors has enlarged remarkably. So this creates a great opportunity for finance instruction in recent years.

Threat:

Banks and other NBFI: Right now there are plenty of banks and NBFI. New banks and NBFI company emerge which is a great deal. The competition is getting higher than before.
Payment overdue: This can be a huge threat for the company if the consumer did not pay their EMI (equal monthly Installment) regularly. There are many cases like that where some consumers unable to pay their EMI. Therefore this can impact the company very badly. As a result this can be threat to the IDLC Finance Limited.
Customer switch: If the consumer gets a better offer than IDLC finance ltd. In that case they can easily switch. Now-a-days there are many Banks and NBFI enter into the market so they come up with a lower interest rate as a result consumer change their mind and easily switch from IDLC to others. This can be another threat to this company.
Fake documents: There are many cases that consumers provide fake documents. Not only that they sometimes hide their information. This is very risky for the company.
Money laundering: This is one of the major threats for any Banks and Financial institution. There are lots of corrupted people in our country. They try to make their money white by using this Banks and Financial institution. If the government caught one consumer from IDLC who is highly corrupted and try to make his money white in that case that specific consumer get huge fine as well as he can easily send to prison on the other hand IDLC Finance Limited can lose their license for a year and get huge amount of fines.

Findings and Recommendation

The Working condition of IDLC finance is very pleasant. They welcome me very kindly. The Manager is being very helpful and guides me throughout the whole process. They treat me as if I am one their employee not as an intern. This makes me very comfortable. IDLC is a well recognized company being a part of it, I feel very fortunate. I had my own desk. They are very flexible and give me all kind of freedom. Most of them very friendly therefore I found the workplace very enjoyable. IDLC finance uses their own server; very few companies can able to do this. However they need to improve or replace some of the PC. Some of the PC is very slow which takes too much time to operate. The Scanner machine is also very old as a result it takes lots of time to scan. If they change all those old model pc replace with high performance Pc.

Conclusion

Today, the Consumer Division has emerged as a leading player in the home and car loan sector and successfully captured a growing share of the market. Very recently, banks and NBFI stared to take notice of the potential of this sector, in term of huge business opportunity, high margin and encouraging recovery rate. The current report aimed at critically examining the Performance of a private financial institution. The main objective of this report was to evaluate the financial analysis of IDLC finance ltd. along with how efficiently are providing services to its customer. From Financial Analysis it has been seen that the performance of IDLC finance ltd is really satisfactory. Working with this company help me to grow my potential skill and knowledge about the financial institution.