The International Finance Investment and Commerce Limited (IFIC) was established in 1976 as the first investment company in Bangladesh under a public-private partnership. Its vision was to introduce Bangladeshi investments to the global market. Initially, IFIC was proactive in realizing this goal. However, political interventions led to a significant deviation from its objectives over time, ultimately resulting in its decline.
The ‘Bank of Maldives Limited’ was established in 1982 through the efforts of the investment company IFIC. It was the first national bank established in the Maldives. IFIC provided 40 percent equity ownership of the bank and took full responsibility for its management. Bangladeshi officials from IFIC introduced banking practices to the island nation. Despite these efforts, IFIC eventually lost its ownership of the bank. And ‘Bank of Maldives’ is now recognized as the leading bank in the Maldives.
On June 24, 1983, the government transformed IFIC into a full-fledged scheduled bank. Jahurul Islam, a pioneering industrialist, became the first chairman of the board of directors. Even after its transition into a commercial bank, IFIC maintained its aspiration for global expansion. In 1985, the bank facilitated the establishment of the Oman Bangladesh Exchange Company. Later, in 1993, it opened branches in Karachi and Lahore, Pakistan. IFIC launched the Nepal Bangladesh Bank Limited in 1994, followed by the Nepal Bangladesh Finance and Leasing Company Limited in 1999, signifying its international footprint.
However, IFIC Bank began losing its way by the late 1990s. Political oligarchs started dominating the board of directors. Chairmanships often changed hands depending on which party was in power. Allegations of share price manipulation in the stock market also emerged against the bank. Over the past 15 years, a portion of depositor funds has allegedly been misappropriated under the guise of loans. During this period, Salman Fazlur Rahman, the adviser on private industry and investment to then-Prime Minister Sheikh Hasina, served as the bank’s chairman. His son, Ahmed Shayan Fazlur Rahman, held the position of vice chairman of the board.
Relevant people are saying that the first two decades of IFIC’s establishment were its golden era. During that time, the institution was oriented toward the international arena. However, later on, it gradually adopted the characteristics of other domestic banks. At one point, stakeholders in the country’s banking sector expected the bank to become a global brand. However, losing that opportunity, the bank is now struggling to sustain its existence. Mismanagement and plundering over the past one and a half decades have left IFIC Bank on the brink of collapse.
Following the mass uprising of students and the public, Bangladesh Bank dissolved the boards of directors of 12 private banks, one of which was IFIC. The chairman of the restructured board, Md Mehmood Husain, told Bonik Barta, “After its establishment, IFIC was progressing toward establishing itself in the international arena as per its goals. However, that continuity could not be maintained. Over the past 15 years, the bank has faced the most abuse. In particular, it suffered the most damage after 2020. Since its inception, the government has owned about 33 percent of IFIC Bank’s shares. In such a situation, the government was expected to exert significant influence over the bank’s management. But we didn’t see that happening. Typically, three to four government-appointed directors are on the bank’s board. Had they taken a strong stance against irregularities and corruption, the bank would not have lost its way.”
Md Mehmood Husain further said, “Among the private banks in the country, gaining control of IFIC’s board is the easiest. Any politically influential individual or group can dominate the board by acquiring just 3-4 percent of the bank’s shares. Bureaucrats are appointed to the board on behalf of the government. They are often reluctant to oppose decisions made by politically powerful figures. As a result, the chairman or influential directors can easily dominate the bank. It is time to break the continuity of this unethical practice that has persisted for years. The process of forming the bank’s board needs a complete overhaul. If institutional investors or foreign investors, alongside the government, are ensured a presence, the bank would be compelled to adhere to good governance principles.”
After being transformed into a scheduled bank, IFIC was listed on the country’s stock market in 1986. The bank currently has a total of 1,922,086,648 shares. According to data from the Dhaka Stock Exchange as of November 30, the government owned 32.75 percent of IFIC Bank’s shares. And 21.04 percent were owned by various institutions. The remaining 45.58 percent of shares were held by general investors. As of last Thursday, the price of each IFIC Bank share was only BDT 7, despite its face value being BDT 10. The situation regarding the bank’s dividend declarations is equally poor. Most recently, IFIC declared a 5 percent stock dividend for its shareholders for the year 2023. In the previous year of 2022, the bank had announced a 2.5 percent cash dividend and a 2.5 percent stock dividend.
IFIC’s global investments have not expanded in recent years; rather, they have shrunk. In July 2021, IFIC Bank announced its decision to sell its shares in Nepal Bangladesh Bank. Established in 1994, IFIC held a 50 percent ownership stake in the bank. And the remaining 50 percent was owned by several Nepalese entrepreneurs. As per the announcement, the shares were sold in February 2022 to a Nepalese individual named Sarika Chowdhury for BDT 4.41 billion. However, reports indicate that IFIC Bank has yet to receive the full payment for the sold shares.
Currently, IFIC’s foreign investments include limited shares in Nepal’s Nabil Bank Limited and Pakistan’s MCB Bank Limited. Among these, IFIC’s shareholding in MCB Bank is less than 1 percent. The bank also owns a 25 percent stake in Oman Exchange LLC, a joint venture. Additionally, IFIC operates a money exchange business in the United Kingdom. In Pakistan, IFIC had opened branches in Karachi and Lahore, which were merged in 2003 to form NDLC-IFIC Bank. This bank was later merged with MCB Bank.
Senior banker Mati Ul Hasan, who has extensive experience working in IFIC Bank’s Karachi and Lahore branches in Pakistan, has recently taken on the role of Managing Director (MD) at Mercantile Bank PLC. Recalling his time at IFIC, Matiul Hasan told Bonik Barta, “I joined IFIC Bank as a probationary officer in 1984. That was the bank’s golden era. When the Karachi branch was opened in Pakistan in 1987, I was sent there. Later, I also worked at the Lahore branch of the bank. I had the opportunity to serve as the Deputy Managing Director (DMD) of Nepal Bangladesh Bank as well. If IFIC had continued moving toward its goals, it could have brought global recognition to Bangladesh.”
He added, “Several banks, including Pakistan’s Habib Bank, operate in numerous countries around the world. Some Indian banks are also gaining international recognition. However, even after half a century of independence, we have not developed a single internationally recognized bank. This is unfortunate for our economy and banking sector.”
At the end of September this year, IFIC Bank’s total assets and liabilities amounted to BDT 545.94 billion. During this period, the bank had deposits of BDT 453.97 billion and disbursed loans worth BDT 444.69 billion. Of these loans, around BDT 50 billion has already been classified as defaulted. By September, the bank had written off BDT 13.07 billion in bad loans. Officials have indicated that by December, at least 15% of IFIC's loans are likely to become non-performing.
After the board was restructured, Bangladesh Bank conducted a special audit of IFIC Bank, while the bank itself also initiated a new audit. Multiple officials involved in the audit told Bonik Barta that Salman F Rahman extracted approximately BDT 70 billion from IFIC Bank through various unnamed companies. These loans lack substantial collateral. Although they are not yet classified as defaulted, they are at risk of becoming non-performing by June next year. If these loans default, the bank’s non-performing loan ratio will rise to 25 percent.
On condition of anonymity, a senior official from Bangladesh Bank said, “Some former directors of IFIC Bank are now trying to rejoin the board. A few of them have even met with the governor to push for their inclusion. The bank’s situation is already critical. If unscrupulous individuals regain positions on the board, it will be extremely difficult to keep the bank afloat.”