IPDC gets conditional approval for €15m loan from DEG

The Bangladesh Bank (BB), with Standard Chartered Bank mediating, has conditionally allowed IPDC Finance Ltd to avail a long-term loan of €15 million from the Germany-based Deutsche Investitions-und Entwicklungsgesellschaft (DEG). 

The conditions would require IPDC to renegotiate the terms and conditions of the foreign currency loan.

Mominul Islam, managing director and chief executive officer (CEO) of IPDC Finance, said IPDC was in talks to avail the financing at a floating rate of interest that would be determined based on the London interbank rate benchmark. However, the central bank has asked that the rate be within 4.2%, which is lower than the negotiated one. 

If the renegotiation finalises, IPDC will use the loan amount for SME, women empowerment, and green financing, said the CEO.

Bangladesh Bank has also instructed that the maximum interest rate against the loans IPDC gives out be no more than 10%.

IPDC must receive the sum from DEG within 60 days of approval, while the loan is planned for a six year term.

With the central bank's condition of reducing the interest rate, the loan might not be a reality if the renegotiation fails.

However, it would not be a big deal for IPDC as it has a portfolio of over Tk7,200 crore and collects deposits of Tk250 crore to Tk300 crore a month. Besides, the DEG financing plan is a testament to IPDC's strengths as a non-bank financial institution, said Mominul Islam.

Right now, SME, women, and green loans are nearly 35% of IPDC's total loan book and it plans to keep increasing such loans.

IPDC shares, having a face value of Tk10 each, closed 6% higher at Tk69.1 on Tuesday at the Dhaka Stock Exchange, relative to the previous session.