IFIC Bank aims to serve one out of every four families

IFIC Bank Ltd, one of the oldest banks in Bangladesh, is expanding its physical presence fast across the country in its bid to bring one in every four families under its network, said its top executive.

The private commercial lender has set the new goal after it crossed the milestone of having the largest branch and sub-branch network earlier this year. Currently, the number of outlets of IFIC Bank stands at 1,254, including 1,081 sub-branches.

It started to set up sub-branches in 2019 and now plans to raise the total number of brick-and-mortar stores to 1,500 by next year.

"In three to five years, we want to have one out of every four families banking with IFIC. In a city, if you travel two miles, you will find us. In rural areas, if you go five miles, you will find us as well," said Shah A Sarwar, managing director and chief executive officer of IFIC Bank, in an interview with The Daily Star recently.

There are 61 banks in Bangladesh and they have collectively set up 11,153 branches in a country of nearly 17 crore population.

The ratio is low in view of the size of the population and IFIC wants to reach the doorsteps of people in remote locations with its outlets supported by digital infrastructure.

Once it sets up the vast network, the bank will account for around 14 per cent of the network of branches and sub-branches.

"We are equally strong in our digital network coverage. We have a clear understanding of the fact that digital banking is the future," Sarwar said.

"Simultaneously, we don't want to neglect the fact that there is demand for physical communication and person-to-person communication with customers."

Sarwar, who has had a long banking career, recalled there was a time when banks had branches with a higher number of employees.

"Now with technological support, a bank can have an operation with a small number of employees and can still stay viable."

"We have actually leapfrogged. We have adopted modern technologies so that we can maintain the bricks-and-mortar presence with the support of technologies."

IFIC Bank has recently opened a sub-branch at Rowmari of Kurigram, a border district in the north.

"Will it not be advantageous if I have a representative there than not having one?" the noted banker asked.

IFIC Bank has developed a service delivery model that Sarwar describes as "uniquely cost-effective" and that effectively manages operational and credit risks.

"That's how we have developed a very viable banking platform where we can combine the people and the technology," he said, adding that IFIC Bank manages one sub-branch with only two persons.

"At the sub-branch, we provide every service except the multi-currency service to our clients."

Sarwar said IFIC Bank has taken the preparation for 10 years to roll out the plan, prepared its people and done away with the traditional concept of management related to cash, non-cash, general banking, credit and non-credit.

It has recruited fresh university graduates and trained them so that they can provide all services to clients.

"The officials are backed by technologies and processes so that there is a unique combination of head office management, technological management and field-level management. We want to offer the best possible services to the people."

IFIC Bank has round-the-clock customer service centres and its account holders can withdraw money from all of the 13,000 ATMs of banks across the country without any extra charge.

"We have connected the last mile with mobile financial services providers such as bKash and Nagad," added Sarwar.

According to Sarwar, if a person has Tk 10,000 in an account, the account will be viable. If a sub-branch has Tk 10 crore in deposits and provides Tk 1 crore in advances, the sub-branch will be viable.

Deposits totalled Tk 16 lakh crore in the banking sector of Bangladesh at the end of 2022.

"We want only Tk 100,000 crore in deposits," said the CEO of IFIC Bank. The bank had about Tk 38,000 crore in deposits in 2022, an increase of more than 14 per cent from Tk 33,314 crore a year ago.

The average deposit per sub-branch more than doubled to Tk 7 crore last year from Tk 3 crore in 2021.

The private bank, which began its journey 40 years ago, also looks to focus on rural areas and cottage, micro, small and medium enterprises, the agriculture sector and small loans.

IFIC is now one of the largest home loan providers and half of its housing loans are in rural areas.

The bank has already attained 80 per cent of the farm loan disbursement target set by the Bangladesh Bank for the current fiscal year. It has financed high-value crops.

In the case of the disbursement of loans for CMSMEs and the credit guarantee scheme, IFIC has surpassed the target as well.

"We want to invest in rural areas instead of bringing money from rural areas and overfeeding the people in urban areas. Instead of bringing money from the rural areas and spending it in the cities, we want to take money from the cities and spend it there. We want to develop our franchises in rural areas," Sarwar said.

Sarwar thinks in order to succeed in a country like Bangladesh, banks will have to connect with the mainstay of the economy.

"We have to build an inclusive economic platform. But we can't build an inclusive economic platform if we work only in top-tier metropolitan areas. The urban centres are already saturated and overbanked."

The top official also talked about bad loans in the banking industry and IFIC Bank's plan to diversify risks.

He termed higher non-performing loans as a challenge for the banking industry.

"We have to identify all the bad debts in a very transparent manner, set aside provisions, make the balance sheet strong and enhance the capital base, distribution network, people quality and compliance."

IFIC's NPLs stood at 6.09 per cent in 2021, lower than the industry average.

"A significant portion of bad loans are large loans and they are concentrated in the urban centres."

"The issue is whether we recognise them. That's the biggest challenge. You will have to recognise it, keep aside the necessary provisions, write them off or go through all of the legal proceedings, and move ahead."

"We are trying to de-risk our balance sheet. We don't want to live with bad loans year after year without recognising it," Sarwar added.