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0 Company Background
IDLC Finance Limited commenced its journey in 1985, as the first ever leasing company of
the country. In 1995, IDLC was licensed as a Financial Institution by the countrys central
bank, Bangladesh Bank, following the enactment of the Financial Institution Act 1993. Over
the last two and a half decades, IDLC has grown in tandem with the countrys transition into
a developing country and has emerged as Bangladeshs leading multiproduct financial
institution. IDLC has changed its name to IDLC Finance Limited from earlier Industrial
Development Leasing Company of Bangladesh Limited in August 2007.
Since 1985, when IDLC was formed as the pioneering leasing company in Bangladesh, the
company continues 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
Companys wide array of products and services range from 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 merchant
banking and capital market services.
The subsidiaries of IDLC finance Limited are
IDLC Securities Limited
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.
IDLC Investments Limited
As advised by the Securities & Exchange Commission (SEC), the Company formed a
separate subsidiary on May 19, 2010 in the name and style IDLC Investments
Limited to transfer its existing merchant banking activities. The Company has
applied to the SEC to transfer the existing merchant banking license of IDLC Finance
Limited in the name of IDLC Investments Limited. After getting approval from SEC,
the companys existing merchant banking services will be provided by its wholly
owned subsidiary, IDLC Investments Limited.
Type of Business:
Legal Form:
Year of Establishment:
C 14218/1992 of 1984-1985.
BCD (Non-banking)/Dhaka/2/1995.
Registered Office:
Corporate Website:
www.idlc.com
Principal Bankers:
Memberships:
1.2 Mission
Their mission is to be one of the top three financial institutions in terms of profitability and
brand image through quality growth and superior client services.
1.3 Vision
To be the most preferred financial institution in the country by exceeding stakeholders
expectations.
1.7 Methodology
We have used different data collection method for conducting the study:
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discussion with the administrative manager and officers of different departments for
relevant and extensive information regarding this study.
Secondary data: Secondary data is our main source of information. Data required for
our study is mainly collected from IDLC website and IDLC annual report of 2010.
1.9 Limitation
While preparing the report we had to face many difficulties:
As we were outsider we did not have access to many confidential documents and
information which would have enriched the report to some great extent.
Lack of time for such vast study.
Lack of information available on the internet.
Some personnel were reluctant in providing appropriate information required for the
study.
Internal Control Committee addresses operational risk and frames and implements policies to
encounter such risks. The Committee assesses operational risk across the Company, as a
whole, and ensures that an appropriate framework exists to identify, assess and manage
operational risk.
The committee supervises the ethical business practices of the different units of the company.
It also ensures the compliance with the stated conduct and code of ethics of the company.
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progress.
Provides an opportunity to identify alternative courses of action and choose the best
course of action from among them
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organization is consistent with the mission, will lead to the vision, and will address
the key strategic directions.
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Requires that the organization be realistic about the scope of work to be undertaken
by linking planned actions to available resources.
Provides for ongoing assessment of progress and identification of barriers so they can
be addressed in a timely manner.
Provides a basis for accountability.
The components of an operational plan:
Outcomes - Outcomes are the most important results that the organization plans to
achieve during the year. The outcomes should be under the control of the organization
and be realistic. They should focus on the "big picture."
Purpose - The purpose statement specifies why the organization plans to do the
proposed work during the year. This statement helps to explain the intent behind the
desired outcomes and why it is important to achieve these outcomes.
Products - Products are the tangible results that will be in hand at the end of the year
if the plan is successfully carried out (for example, a policies and procedures manual,
or training curriculum).
Major Actions - Major actions describe what the organization will do to achieve the
desired outcomes for the year. Major actions are derived from the key directions and
strategies included in the strategic plan. They are statements that describe in
measurable terms what will be accomplished during the year.
Action Plans - Action plans are developed for each major action. The plans lay out in
detail exactly what steps are to be taken with respect to the major action. For each
action step, it is important to identify who is responsible. If there is more than one
responsible person, a lead person should be identified. For each action step, the start
and target completion dates should be identified, keeping in mind that some steps
cannot start until others are completed.
governance and puts in place those arrangements which it considers are in the best interest of
the Company and its shareholders, and consistent with its responsibilities to other
stakeholders. The Board of Directors is in full control of the Companys affairs and is also
fully accountable to the shareholders. They firmly believe that the success of the Company
largely depends on the credible corporate governance practices adopted by the Company.
Taking this into consideration, the Board of Directors of IDLC set out its strategic focus and
oversees the business and related affairs of the Company. The Board also formulates strategic
objectives and policy framework for the Company.
Chairman of the Board
The Chairman of the Board is elected to the offi ce of Chairman by the directors. The Board
considers that the Chairman is independent.
Role of the Chairman
The Chairman runs the Board. The Chairman serves as the primary link between the Board
and management, and works with the CEO and Company Secretary to set the agenda for
Board meetings. It is the Chairmans responsibility to provide leadership to the Board and
ensure that the Board works effectively and discharges its responsibilities as directors of the
Company.
Chairman of the Board & CEO of the company are different person
The Chairman of the Board is not the Chief Executive of the Company. The role of Chairman
and the CEO & Managing Director are independent and separate.
Role of the CEO & Managing Director
The CEO & managing Director performs three fundamental roles in IDLC:
First, CEO as a leader establishes and directs the vision and mission of the team. In
this capacity, the CEO is the source of visionary strength of the Company and keeps it
on a consistent track to achieving the vision;
Second, CEO is a project manager. In this role, the CEO is responsible for directing
the operational activities of the Company by scheduling the utilization of the
Companys resources, including people and capital equipment. In this way, the CEO
gets things done through the efforts of the people in the Company. The CEO is
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responsible for establishing and executing the Companys operating plan that is
necessary to achieve the Companys objectives;
Third, CEO is a coach, and as such picks the people for the management team and
improves the performance of people through ongoing counseling. As a coach, the
CEO works with people to help them become greater contributors by helping them
improve their efficiency and effectiveness.
Whenever a plan needs to be initiated or a plan needs to be changed or make further
modification- the board of directors held the board meeting in this regard:
Holding of the Board meeting
The meeting of the Board of Directors of IDLC is normally held at the Registered and
Corporate Head Office of the Company. The meetings are held frequently, at least once in a
quarter, to discharge its responsibilities and functions as mentioned above. Meeting is
scheduled well in advance and the notice of each Board meeting is given, in writing, to each
director by the Company Secretary.
Process of holding Board meeting
The Company Secretary prepares the detailed agenda for the meeting. The Board papers
comprising the agenda, explanatory notes and proposed resolutions are circulated to the
directors in advance for their review. The members of the Board have complete access to all
information of the Company enabling them to work efficiently. The members of the Board
are also free to recommend inclusion of any matter in the agenda for discussions. The
Company Secretary and Chief Financial Officer always attends the Board meeting and other
senior management is invited to attend Board meeting to provide additional inputs to the
items being discussed by the Board and make necessary presentations. There are procedures,
at IDLC, for keeping the Board up-to-date with the Companys activities and relevant
external developments. These includes senior management presenting significant matters to
the Board and it being able to seek further information on any issue relating to performance,
strategy, outlook, etc.
Independent Decision Making
Any director may seek external, independent, professional advice at the Companys expense.
The policy of the Board is that external advice will be made available to all directors, unless
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the Chairman of the Board determines otherwise. It is expected that a director will consult the
Chairman of the Board, Managing Director or Company Secretary before obtaining external
advice.
Role of the Company Secretary
Appointed by the Board, the Company Secretary works with the Chairman of the Board to
monitor and enhance corporate governance processes and to ensure that Board policies and
procedures are followed.
Identification of a
problem
Identification of
decision criteria
Allocation of weights
to criteria
Evaluation of decision
effectiveness
Development of
alternatives
Analysis of
alternatives
Selection of
alternative
Implementation of
alternative
Market Risk
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Market risk refers to the risk of fluctuation in a variety of markets such as interest rates,
prices of securities where the values of assets and liabilities can change and there exists the
risk of incurring losses.
Liquidity Risk
Liquidity risk arises when a company is unable to meet the short term obligation to its lenders
and stakeholders. This arises from the adverse mismatch of maturities of assets and liabilities.
Operational Risk
Operational risk is the potential loss arising from a breakdown in companys systems and
procedures, internal control, compliance requirements or corporate governance practices that
results in human error, fraud, failure, damage of reputations, delay to perform or compromise
of the companys interests by employees. Operational risk may also arise from the following:
Turnover of trained staff;
Risk of insider dealings;
Leakage of sensitive information;
Shortcomings of organizational structure;
Risk of falling in credit ratings;
Money laundering;
Changes in statutory requirements;
Technological obsolescence;
Business volume risks
At IDLC, business volume risk may arise in the form of risk of falling business volumes and
market share, risk of being overtaken and losing leadership position and risk of over trading
which may affect profitability due to volatile revenues and reduced spread earnings, credit
rating and reputation. Risk of over trading may lead to insufficient capital.
Here is an overview of some of the crucial steps carried out by IDLC to ensure successful
risk management program:
Integrating risk management policies into the companys top priority;
Maintaining those values via actions;
Performing risk analysis;
Implementation of various strategies to minimize it;
Building of screening systems to encourage early warnings related to prospective risk;
Periodic analysis of the management program.
Managers in IDLC generally make the decision in group. The process of making group
decision has some advantages:
Make more accurate decisions
Provides more complete information
Offers a greater diversity of experiences and perspectives
Generates more alternatives
Increases acceptance of solution
Increases legitimacy of decision.
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Conceptual
Directive
Behavioral
Tolerance for
Ambiguity
Low
Rational
Intuitive
Way of thinking
4.2 Departmentalization
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Span of control refers to the number of subordinates a manager can direct efficiently and
effectively. Traditionally it was believed that at most 6 people are efficient and effective
under a manager. But things have changed now a day. Organizations have become more
dynamic and complex. Managers work with 30-40 people under him/her. The managers in
IDLC normally operate 10-12 people under them. But for the efficient operation of the
organization these people are trained very well to cope with the pace of the manager.
IDLC adheres to the highest ethical standards and believes. This is a key to business success.
The company prioritizes statutory compliance and has a set of Code of Ethics for employees,
who are required to read and sign these documents every year, as a sign of reiteration and
commitment to the principles enshrined in it.
carried out by an independent consultant in the year 2010, to assess and evaluate the current
pay level of IDLC vis a vis the market. The survey results helped us make necessary
adjustments to ensure that IDLC employees are fairly paid and which is also competitive in
the market.
Category
Core Management
Staffs
Management Staffs
Executive Officers
Support Staffs
Total
2010
2009
2008
10
11
82
73
188
353
60
49
135
253
54
43
99
207
6.0 Conclusion
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