The IPDC Finance Limited, in collaboration with the IBM, has launched the country's first blockchain-based supply chain financing platform "Orjon" which enables the lender to process supply chain loan applications within half an hour.
"Now we can provide supply chain loans to enlisted borrowers within half an hour. Neither the banker nor the client needs to see each other or any third party for verification of hardcopy documents, which took up to three working days until yesterday," IPDC's Managing Director and CEO Mominul Islam told The Business Standard in an interview.
State Minister for ICT Zunaid Ahmed Palak, inaugurated the first-of-its-kind technology platform at a hotel in the capital on Thursday evening, in the presence of top officials from the Bangladesh Bank, technology partner IBM and development financer DFID.
The IPDC alone is providing over 50 percent of supply chain loans in Bangladesh and it is committed to doing more in coming years.
Orjon is the comprehensive supply chain financing solution that provides financial facilities to corporate organisations, micro and small enterprises (MSEs) in one single chain through factoring, reverse factoring, work order and distributor financing.
How will Orjon ease the entire process and add value?
"Easy, fast and collateral-free are the three pillars of Orjon," said Mominul Islam.
"Orjon" will help streamline the process of loan application, relevant documents submission by clients, verification of those by bankers and loan disbursement letter dissemination to the client.
"Suppose, an IPDC MSE client is a supplier to a large corporate manufacturer. It will receive its bill from the corporation after it accomplishes the supply of ordered goods. Until then, it needs a working capital financing and the IPDC is providing it with the essential amount under an arrangement," said the IPDC CEO.
For that, the client needs to submit all its documents on the obtained work orders and its financial credentials to IPDC officers for verification.
For authentication, both the parties may need to meet each other, more cumbersomely bankers need to go to offices of other parties engaged with the client's business like the work order provider corporate. The verification of bank details too takes time, energy and resources.
The new platform integrates each of the windows related to the supply chain financing process.
"Now the client will send its documents to us online through Orjon within moments, our officers will verify those through the same platform, and if those are found authenticated they will okay the application within a short period."
Some 11 large corporate groups of the country have already joined hands with the IPDC to let their suppliers and distributors enjoy the ease and the added value. They are connected to the online platform through their own windows.
The platform has reduced costs for everyone engaged with it.
"As a blockchain platform, Orjon is safe to all the users in terms of online security and authentication," said Mominul.
An industrywide solution for improved ecosystem
"Currently, we are disbursing the loans to client's bank accounts. But as we are planning to go deeper into economic activities, mobile wallets will be included as a transaction channel soon," said Mominul.
The platform will provide easy and low-cost credit facilities and support to develop over 25,000 small enterprises over the next five years for the improved supply chain management.
As a result, "I am confident that better business environment, market expansion and more than 200,000 new jobs will be created with greater financial progress than ever before."
The goal of "Orjon" is to create a holistic supply chain financing eco-system in the country and this is the first of its kind in Bangladesh.
"Initially, we are using 'Orjon' ourselves, educating clients and stakeholders to use it and in the next year the platform will be open to the entire banking industry," said Mominul.
About IPDC Finance Limited
In 1981, the Bangladesh government, along with a distinguished group of international development agencies, initiated the first non-bank financial institute of the country named Industrial Promotion and Development Company of Bangladesh Ltd.
It was running with a focus to finance industrial projects until 2015, when Switzerland-based investor The Aga Khan Fund for Economic Development transferred its stake to Brac – the largest non-governmental organization of the world and its allies.
The new board of the lender came up with a renewed business focus to innovate a lot and explore the areas to serve in line with Bangladesh's socio-economic and sustainability priorities.
The company's name was changed to the IPDC Finance Ltd as it shifted focus to small and medium scale clients instead of large industrial ones.
The strategy to serve the untapped or underserved market areas proved successful over last four years as the IPDC has grown to a balance sheet of over Tk4,500 crore from less than one-fifth the amount, five years back.
It is also one of the efficient lenders of the country, as it managed to keep its non-performing loans within one tenth of the industry average.