R

IDLC FINANCE LIMITED
a n n u a l r e p o r t 2 0 1 2
Letter of Transmittal 4
Notice of the 28th Annual General Meeting 5
Who we are
IDLCs Vision, Mission and Strategic Objectives 6
IDLCs Core Values 7
IDLCs Code of Conduct and Ethics 8
IDLC at a Glance 9
IDLCs Products and Services 10
Shareholding Composition of IDLC Finance Limited 13
Company Information 14
History - Key Milestones 15
Our Management
Board of Directors 17
Brief Profle of the Directors 18
Committees of the Board & Management 22
Management and Executives 24
Our Governance
Statement of Risk Management 28
Our Treasury 37
Statement on Corporate Governance 42
Corporate Social Responsibility (CSR) at IDLC 60
Event Highlights 68
Our Human Capital 70
Report of the Audit Committee 74
How we are assessed
Assessment Report on the Going Concern Status of IDLC 77
Business Environment and Its Likely Impact on the Financial Performance of IDLC 79
Our performance summary
Performance Indicators-Group 80
Key Operating and Financial Highlights-Group 82
Value Added Statement 83
Market Value Added Statement 84
Economic Value Added Statement 85
Financial Highlights as Required by the Bangladesh Bank 86
What we state
Statement of Directors' Responsibility for Internal Control and Financial Reporting 87
CEO & Managing Directors Review of Economic Environment and Business Performance 88
Directors' Report to the Shareholders 106
Certifcation on the compliance with the Corporate Governance guidelines 114
Status of compliance with the Corporate Governance guidelines 115
TABLE OF CONTENTS
Our Financial performance
IDLC Group
Report of the CEO & Managing Director and the Chief Financial Of cer 129
Auditors Report 130
Financial Statements - IDLC Group
Consolidated Balance Sheet 132
Consolidated Proft and Loss Account 134
Consolidated Cash Flow Statement 136
Consolidated Statement of Changes in Equity 138
Financial Statements - IDLC Finance Limited
Balance Sheet 140
Proft and Loss Account 142
Proft and Loss Account of Merchant Banking Operation 144
Cash Flow Statement 145
Statement of Changes in Equity 146
Liquidity Statement 148
Notes to the Consolidated and Separate Financial Statements 149
Groups Subsidiaries
IDLC Securities Limited
Directors Report to the Shareholders 205
Auditors' Report 210
Financial Statements
Statement of Financial Position 211
Statement of Comprehensive Income 212
IDLC Investments Limited
Directors Report to the Shareholders 214
Auditors' Report 219
Financial Statements
Statement of Financial Position 220
Statement of Comprehensive Income 221
Stakeholders Corner
Disclosures under Pillar III- Market Discipline 223
Information for the Stakeholders 235
Glossary 237
IDLCs Presence 241
Shareholders Note 245
Proxy Form & Attendance Slip 247
4
Annual Report 2012
LETTER OF TRANSMITTAL
Letter of Transmittal
All Shareholders,
Bangladesh Bank,
Registrar of Joint Stock Companies & Firms,
Bangladesh Securities and Exchange Commission,
Dhaka Stock Exchange Limited, and
Chittagong Stock Exchange Limited.
Dear Sir (s):
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2012
Enclosed please fnd a copy of the Annual Report together with the audited fnancial statements including
consolidated and separate balance sheet as at December 31, 2012 and income statements, cash fow
statements and changes in equity statements for the year ended December 31, 2012 along with notes
thereon of IDLC Finance Limited and its subsidiaries (IDLC Securities Limited & IDLC Investments Limited) for
your kind information and record.
Thank you.
Yours sincerely,
Mohammad Jobair Rahman Khan
Company Secretary
5
Annual Report 2012
NOTICE OF THE 28
TH
ANNUAL GENERAL MEETING
Notice of the 28
th
Annual General Meeting
Notice is hereby given to all the Members of IDLC Finance Limited (IDLC) that the
28th Annual General Meeting of the Company will be held on Monday, March 25,
2013 at 11.00 a.m. at Bashundhara Convention Center, Umme Kulsum Road, Block-C,
Bashundhara R/A, Baridhara, Dhaka-1229, for transacting the following business:

A01328-01 Renewal of employment of the CEO & Managing Director;
A01328-02 Adoption of Directors Report, Auditors Report and Audited Financial Statements for the year
ended December 31, 2012;
A01328-03 Declaration of dividend for the year ended December 31, 2012, as recommended by the Board;
A01328-04 Election of Directors and appointment of Independent Director; and
A01328-05 Appointment of Auditors of the Company for the term until the conclusion of the next Annual
General Meeting (AGM) and fxation of their remuneration, as per Companies Act, 1994.
By order of the Board
Sd/-
Company Secretary
Dated: February 28, 2013
Notes
1. The Record Date for the AGM is Thursday, February 28, 2013. The Shareholders whose names would appear
in the Register of Members of the Company and/or in the Depository on the Record Date will be eligible to
attend the 28
th
AGM and entitled to Stock Dividend as mentioned above;
2. The Board of Directors recommended stock dividend @ 30% (three shares for every ten ordinary shares held)
for the year 2012;
3. A Member may appoint a proxy to attend and vote in his place by flling proxy form as per Article 103 of the
Articles of Association of the Company. The proxy form, duly completed and stamped, must be deposited at
the of ce not later than 48 hours before the time scheduled for holding the meeting;
4. Pursuant to Article 81 of the Articles of Association, a corporate member of the Company, by resolution of the
Board of Directors or other Governing Body of such body corporate, may authorize such person as it thinks ft,
to act as representative at any meeting of the members of the Company;
5. Annual Report, Attendance Slip and Proxy Form along with the Notice will be sent to all the Members
by Courier Service/Post. The Members may also collect the Proxy Form from the Registered Of ce of the
Company.
6
WHO WE ARE
Annual Report 2012
IDLCS VISION, MISSION AND STRATEGIC OBJECTIVES
IDLCs Vision, Mission and
Strategic Objectives
Our Vision
We will be the best fnancial brand in the country
Our Mission
We will focus on quality growth, superior customer experience and sustainable business practices
Strategic Objectives
Grow and develop our talent pool;
Fully leverage new core banking platform;
Optimize distribution points;
Grow and diversify funding sources;
Grow sales and service capabilities in Consumer Division;
Aggressively grow SME portfolio;
Focus on top-tier clients in Corporate;
Consolidate capital market operations and enhance capabilities;
Embrace internationally accepted corporate governance and sustainable business practices.
7 IDLCS CORE VALUES
WHO WE ARE
Annual Report 2012
IDLCs Core Values
8 IDLCS CODE OF CONDUCT AND ETHICS
IDLCs Code of Conduct and Ethics
In accordance with approved and agreed Code of Conduct,
IDLC employees shall:
act with integrity, competence, dignity and in an ethical manner when dealing with customers, prospects,
colleagues, agencies and public;
act and encourage others to behave in a professional and ethical manner that will refect positively on IDLC
employees, their profession and on IDLC, at large;
strive to maintain and improve the competence of all in the business;
use reasonable care and exercise independent professional judgment;
not restrain others from performing their professional obligations;
maintain knowledge of and comply with all applicable laws, rules and regulations;
disclose all conficts of interest;
deliver professional services in accordance with IDLC policies and relevant technical and professional
standards;
respect the confdentiality and privacy of customers, people and others with whom they do business;
not engage in any professional conduct involving dishonesty, fraud, deceit or misrepresentation or commit
any act that refects adversely on their honesty, trustworthiness or professional competence.
IDLC employees have an obligation to know and understand not only the guidance contained in the Code of
Conduct, but also the spirit on which it is based.
WHO WE ARE
Annual Report 2012
9 IDLC AT A GLANCE
IDLC at a Glance
IDLC Finance Limited was established in Bangladesh in
1985, as the frst-ever leasing company of the country,
through the collaboration of IFC, German Investment
and Development Company (DEG), Kookmin Bank and
Korean Development Finance Corporation, the Aga
Khan Fund for Economic Development, the City Bank
Limited, IPDC of Bangladesh Limited, and Sadharan
Bima Corporation. As the company evolved over the
years, the foreign shareholding gradually moved out
and the last foreign shareholding was bought out by
local sponsors in 2009.
IDLCs strong focus on revenue diversifcation has
led to the establishment of diferent client segments
in the Corporate, Retail, SME and Capital Markets of
Bangladesh. The current product portfolio consists of
Corporate and Structured Finance solutions for local
and multinational corporate houses; Personal fnancing
products such as deposits, home loans, car loans,
personal loans etc.; fnancing facilities for Small and
Medium Enterprises; Merchant Banking solutions such
as Portfolio Management and Investment Banking (IPO,
RPO, Bond Issuance, Rights Shares Ofering etc.); and
Brokerage services.
With this diversifed array of products, IDLC Finance
Limited is at present the largest multi-product Non-
Bank Financial Institution in Bangladesh, having two
wholly-owned subsidiaries, IDLC Investments Limited
and IDLC Securities Limited for carrying out its capital
market operations. The Group is represented by over
609 employees working in 26 branches in the major
cities of the country.
IDLC is highly respected by its clients, peers, employees
and regulators for its professional pool of resources, its
progressive and enabling work environment, and its
strong ethical practices. With signifcant growth in its
business and proft over the last few years, the company
has consistently demonstrated exemplary corporate
governance and strict statutory compliance, and is a
standard bearer in this regard in the fnancial sector of
Bangladesh.
Moreover, starting from 2010, its silver jubilee
year, IDLC has decided to step up its commitment
to sustainable business practices, with particular
focus on environmental and social development.
It has subscribed to a number of leading local and
international sustainability initiatives including the
Bangladesh CSR Centre, the UN Global Compact
(UNGC) and the UN Environment Programme Finance
Initiative (UNEP FI), and IDLC is the frst company to
become a member of UNEP FI from Bangladesh. As part
of this commitment, IDLC is now active in promoting
responsible practices among its stakeholder groups,
mostly its employees and clients, while it is streamlining
its own policies and practices to emerge as a truly
responsible brand.
Subsidiaries
IDLC Securities Limited (IDLCSL)
IDLC Securities Limited, a fully owned subsidiary
of IDLC, ofers full-fedged international standard
brokerage service for retail and institutional clients.
It has seats on both Dhaka Stock Exchange Limited
and Chittagong Stock Exchange Limited. It is also a
Depository Participant (DP) of Central Depository
Bangladesh Limited (CDBL).
IDLC Investments Limited (IDLCIL)
As required by the Bangladesh Securities & Exchange
Commission (BSEC), the Company formed a separate
subsidiary on May 19, 2010 in the name and style IDLC
Investments Limited to transfer its merchant banking
activities. The Company obtained license from BSEC
on August 02, 2011 and commenced its business on
August 16, 2011. The main businesses of the company
are portfolio management, issue management,
underwriting of securities and advisory services.
WHO WE ARE
Annual Report 2012
10 IDLCS PRODUCTS AND SERVICES
IDLCs Products and Services
WHO WE ARE
Annual Report 2012
11 IDLCS PRODUCTS AND SERVICES
WHO WE ARE
Annual Report 2012
12
Customer Focus
13
WHO WE ARE
Annual Report 2012
SHAREHOLDING COMPOSITION OF IDLC FINANCE LIMITED
Shareholding Composition of
IDLC Finance Limited
As on December 31, 2012
Sl. No. Name of Shareholders No. of Shares %
1 Sponsors/Directors:
The City Bank Limited 35,103,537 28.37
Transcom Group 13.33
Eskayef Bangladesh Limited 9,900,000 8.00
Transcraft Limited 4,966,412 4.01
Bangladesh Lamps Limited 1,633,500 1.32
Sadharan Bima Corporation 9,428,512 7.62
Mercantile Bank Limited 9,281,250 7.50
Reliance Insurance Co. Limited 8,662,500 7.00
Sub-Total 78,975,711 63.82
2 GENERAL

Institutions:
Bangladesh Fund 3,958,387 3.20
Pubali Bank Limited 1,412,600 1.14
Eastern Bank Limited 1,362,500 1.10
Marina Apparels Limited 1,237,500 1.00
Other Institutions 9,904,686 8.00
Sub-Total 17,875,673 14.44
Individuals:
General Public (Individuals) 26,898,616 21.74
Sub-Total 26,898,616 21.74
Total Holdings 123,750,000 100.00
14 COMPANY INFORMATION
Company Information
Company Registration No.
C 14218/1992 of 1984-1985
Bangladesh Bank License No.
BCD (Non-banking)/Dhaka/2/1995
Tax Identifcation Number (TIN)
210-200-1222/LTU/Dhaka
VAT registration Number
9011043908
Registered Of ce
Bays Galleria (1
st
Floor)
57 Gulshan Avenue, Gulshan 1
Dhaka 1212, Bangladesh
Tel: +880 2 883 4990 (Auto Hunting)
Facsimile: +880 2 883 4377, 883 5887
Corporate Website
www.idlc.com
Email address:
mailbox@idlc.com
Auditors
Hoda Vasi Chowdhury & Co.
Chartered Accountants
BTMC Bhaban (Level 8)
7-9 Kazi Nazrul Islam Avenue
Karwan Bazar C/A, Dhaka 1217
Principal Bankers
Standard Chartered Bank
Citibank N.A.
Major Stock Brokers
LankaBangla Securities Limited
BRAC EPL Stock Brokerage Limited
Multi Securities Limited
Memberships
Associations
Bangladesh Leasing & Finance Companies Association
Asian Financial Services Association
Bangladesh Merchant Bankers Association
Bangladesh Association of Publicly Listed Companies
Institute
The Institute of Bankers, Bangladesh
Chambers of Commerce & Industry
International Chamber of Commerce - Bangladesh
Metropolitan Chamber of Commerce & Industry
Dhaka Chamber of Commerce & Industry
Bangladesh German Chamber of Commerce & Industry
The Federation of Bangladesh Chambers of Commerce and Industry
Sustainability initiatives/ partners for sustainability
UN Global Compact (UNGC)
UN Environmental Programme Finance Initiative (UNEP FI)
CSR Centre
International Memberships
International Factors Group (IFG) - an International association
of factoring companies
Small Business Banking Network (SBBN) - a global initiative to
improve access to fnancial business by small businesses
Registered Name of the Company
Legal Form
A public limited company incorporated in Bangladesh on May 23, 1985 under the Companies
Act 1913 and listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange
Limited on March 20, 1993 and November 25, 1996, respectively. The Company licensed as
Financial Institution under Financial Institutions Act, 1993 on February 7, 1995.
WHO WE ARE
Annual Report 2012
15 HISTORY- KEY MILESTONES
History- Key Milestones
23-May-85 Incorporation of the Company
22-Feb-86 Commencement of leasing business
1-Oct-90 Establishment of branch in Chittagong, the main port city
20-Mar-93 Listed with the Dhaka Stock Exchange Limited
7-Feb-95 Licensed as Non-Banking Financial Institution under the Financial Institutions Act, 1993
25-Nov-96 Listed with the Chittagong Stock Exchange Limited
27-May-97 Commencement of Home Finance and Short Term Finance operations
22-Jan-98 Licensed as a Merchant Banker by the Securities and Exchange Commission
15-Jan-99 Commencement of Corporate Finance and Merchant Banking operations
29-Jan-04 Opening of the frst retail focused branch at Dhanmondi
29-Jun-04 Opening of Gulshan Branch
22-Nov-04 Launching of Investment Management Services "Cap Invest"
2-Jan-06 Opening of frst SME focused branch at Bogra
6-Apr-06 Opening of Uttara Branch
1-Jul-06 Relocation of Company's Registered and Corporate Head Of ce at own premises at 57
Gulshan Avenue
18-Sep-06 Commencement of operation of IDLC Securities Limited, a wholly owned subsidiary of IDLC
14-Mar-07 Launching of Discretionary Portfolio Management Services "Managed Cap Invest"
5-Aug-07 Company name changed to IDLC Finance Limited from Industrial Development Leasing
Company of Bangladesh Limited
6-Jan-09 Opening of Sylhet Branch
26-Aug-09 Opening of Gazipur SME Booth
3-Feb-10 IDLC started its operation at Narayanganj
24-Feb-10 Inauguration of Savar Branch
8-Aug-10 IDLC opened its 2nd branch in Chittagong at Nandankanon
27-Oct-10 IDLC stepped in Comilla
23-Dec-10 IDLC inaugurated its Narsingdi Branch
27-Dec-10 Opening of Keraniganj Branch
15-Jun-11 IDLC started its operation at Mirpur
9-Aug-11 Inauguration of Tongi Branch
16-Aug-11 Commencement of operation of IDLC Investments Limited, a wholly owned subsidiary of IDLC
18-Jan-12 Opening of Jessore Branch
11-Mar-12 IDLC re-brands
WHO WE ARE
Annual Report 2012
16
Value Creation
17 BOARD OF DIRECTORS
OUR MANAGEMENT
Annual Report 2012
Board of Directors
Chairman
Anwarul Huq
Chairman & CEO, Tyser Risk Management (Bangladesh) Limited
- Nominated by Reliance Insurance Limited
Directors
Rubel Aziz
Chairman, The City Bank Limited
- Nominated by The City Bank Limited
Md. Habibur Rahman Mollah, FCA
COO, Bangladesh Lamps Limited and
Bangladesh Electrical Industries Limited
- Nominated by Transcom Group
Aziz Al Kaiser
Director, The City Bank Limited
Hossain Mehmood
Director, The City Bank Limited
Meherun Haque
Vice Chairperson, The City Bank Limited
K. Mahmood Sattar
Managing Director & CEO, The City Bank Limited
Md. Rezaul Karim
Managing Director, Sadharan Bima Corporation
- Nominated by Sadharan Bima Corporation
M. Amanullah
Director, Mercantile Bank Limited
- Nominated by Mercantile Bank Limited
Farooq Sobhan
President & CEO, Bangladesh Enterprise Institute
- Independent Director
Syed Abu Naser Bukhtear Ahmed
Chairman, Financial Excellence Limited
- Independent Director
CEO & Managing Director
Selim R. F. Hussain
Company Secretary
18 BRIEF PROFILE OF THE DIRECTORS
OUR MANAGEMENT
Annual Report 2012
Brief Profile of the Directors
Mr. Md. Habibur Rahman Mollah is a Chartered Accountant with thirty one years
of experience in key positions of Finance and Accounts with multi-disciplinary
business organizations.
He started his career in 1983 and at present, is working in Transcom Group, one of
the largest business conglomerates in the country, as Chief Operating Of cer of
Bangladesh Lamps Limited, Bangladesh Electrical Industries Limited and Transcom
Cables Limited.
An industrial entrepreneur, Mr. Rubel Aziz has been in the business for a long
period and has set up and successfully executed a several industrial undertakings.
He is presently the Chairman of The City Bank Limited. He is also the Managing
Director of Partex Beverage Limited, a franchise of Royal Crown Cola International
(RC Cola), Partex Plastics Limited, Partex Jute Mills Limited and Partex Properties
Limited. In addition, he is also the Director of a number of companies of Partex
Group and IBAIS University. Rubel Aziz is also the former Chairman of Janata
Insurance Co. Limited and elected former President of Gulshan Club Limited.
Mr. Anwarul Huq was the founder Director and a member of the Audit Committee
of Reliance Insurance Limited. Mr. Huq is the Chairman and Chief Executive Of cer
of Tyser Risk Management (Bangladesh) Limited. He is also the Chairman & CEO
of Finaccord Trading Limited. He carries vast experience in the feld of insurance
business and is widely known in the insurance industry and business circles.
He is also the Honorary Consul General of Greece and Senior Vice-President of
Bangladesh Squash Rackets Federation.
Anwarul Huq
Chairman-nominated by
Reliance Insurance Limited
Rubel Aziz
Director-nominated by
The City Bank Limited
Transcom Group
19 BRIEF PROFILE OF THE DIRECTORS
OUR MANAGEMENT
Annual Report 2012
Mrs. Meherun Haque is the daughter of Mr. Deen Mohammad, a leading
industrialist and Chairman of Phoenix Group.
Mrs. Haque is the Vice-Chairperson of The City Bank Limited.
Mr. Hossain Mehmood is an industrial entrepreneur and has been in the business
for a long period and successfully set up and executed a good number of industrial
undertakings.
He is Director of a number of companies of Anwar Group of Industries and also one
of the directors of The City Bank Limited. Mr. Mehmood is the Managing Director
of Hossain Dyeing & Printing Mills Limited, Mehmood Industries (Pvt.) Limited and
Anwar Silk Mills Limited.
Mr. Kaiser graduated from U.S. International University, London, UK. An industrial
entrepreneur, Mr. Kaiser, has a track record of establishing and running a good
number of industrial projects successfully. Mr. Kaiser is the Vice-Chairman of Partex
Star Group.
He is also the Managing Director of Star Particle Board Mills Limited, Partex Limited,
Partex Real Estate Limited, Partex Builders Limited, Fairhope Housing Limited,
Corvee Maritime Company Limited, Partex Furniture Industries Limited, Partex
Laminates Limited and Partex PVC Industries Limited. Mr. Kaiser holds Directorship
in The City Bank Limited, GSP Finance Company Limited, Danish Condensed Milk
(BD) Limited, Danish Milk (BD) Limited, Danish Food Limited & Rubel Steel Mills
Limited.
Aziz Al Kaiser
Hossain Mehmood
Meherun Haque
20
OUR MANAGEMENT
Annual Report 2012
BRIEF PROFILE OF THE DIRECTORS
Mr. M. Amanullah, is one of the distinguished industrialists and entrepreneurs in
Bangladesh. He is the Chairman of Aman Group of Companies.
He is one of the Sponsor Shareholders of Mercantile Bank Limited, and Ex-Chairman
& Present Advisor of Global Insurance Limited and Desh General Insurance Limited.
With his visionary direction, Aman Group has extended its horizon into print media,
Amader Shomoi, a widely circulated daily bangla news paper as well.
He is one of the members of the Governing Board of the Presidency University,
Dhaka, Metropolitan University and Institute of Business & Technology (IBIT), Sylhet.
Mr. Md. Rezaul Karim is Managing Director of Sadharan Bima Corporation (SBC). He
started his career at SBC in 1981 as a Trainee of cer. During his career with SBC, he
attended a number of training and workshops on insurance related matters both at
home and abroad.
Mr. Karim is also a nominated Director of Investment Corporation of Bangladesh
(ICB), National Housing Finance and Investments Limited (NHFIL), Central
Depository Bangladesh Limited (CDBL), National Tea Company Limited (NTC)
and Bangladesh Insurance Academy. He is also a Director of Asian Re-insurance
Corporation, Bangkok, Thailand.
Mr. K. Mahmood Sattar started his career with the former ANZ Grindlays Bank in
1981. During his career with the bank, he worked in Mumbai, India as Corporate
Dealer in Treasury, for more than two years in Melbourne, Australia as Manager,
Corporate Banking and after returning from abroad Mr. Sattar was Regional Head
in Chittagong. Thereafter, for more than fve years he was Head of Corporate &
Investment Banking in Dhaka.
Mr. Sattar joined Eastern Bank Limited as the Managing Director & CEO in January,
2001 and successfully transformed the bank to a modern bank. Mr. Sattar joined
The City Bank Limited in July, 2007 as the Managing Director & CEO. He is the
Ex-Chairman of the Association of Bankers, Bangladesh (ABB) and Chairperson of
SWIFT user group in Bangladesh and he is one of the Directors of Unique Hotel &
Resort, nominated by The City Bank Limited.
Kazi Mahmood Sattar
Md. Rezaul Karim
Sadharan Bima Corporation (SBC)
M. Amanullah
Mercantile Bank Limited
21
OUR MANAGEMENT
Annual Report 2012
BRIEF PROFILE OF THE DIRECTORS
Mr. Selim R. F. Hussain is a career banker, with an Honours degree in Accounting
from Dhaka University and an MBA (Major in Finance) from the Institute of Business
Administration, also from Dhaka University. Mr. Hussain worked in various roles
with the two largest multi-national banks in Bangladesh, ANZ Grindlays Bank and
Standard Chartered Bank, for twenty four years, before moving to the IDLC Group in
2010. He has resided in and worked in India and Australia for signifcant periods of
his career and prior to taking over the helm at IDLC Finance Limited, was the Head
of Finance & Strategy for Standard Chartered Banks Consumer Banking Division in
Mumbai, India.
Mr. Hussain was also CFO for Standard Chartered Bank, Bangladesh, from 2002 to
2007. Mr. Hussain has been IDLC Finances Managing Director and the Chairman
of this companys two wholly-owned subsidiaries, IDLC Investments and IDLC
Securities, since January 2010.
Mr. Syed Abu Naser Bukhtear Ahmed is the Chairman of Financial Excellence Limited,
Dhaka and Managing Director of Trade Hub (Bangladesh) Limited, Dhaka. He is an MBA
from Institute of Business Administration, University of Dhaka and a seasoned professional
banker combining over 40 years of international experience with a deep knowledge of the
South Asian banking sector. He has exposure to the World Bank /IMF reform agenda for the
nationalized banking sector.
Mr. Ahmed started his career as an Of cer Grade 1 with State Bank of Pakistan in February
1970. He then worked with Bangladesh Bank as Banking Of cer till September 1974 and
then joined Central Bank of United Arab Emirates and worked there till September 1995.
After serving three Central Banks for over 25 years, he served Arab Bangladesh Bank Limited
in Dhaka from 1995 to 1999 and then Prime Bank Limited Dhaka from 1999 to 2002. He also
served Southeast Bank Limited as the President & Chief Executive Of cer from 2002 to 2004
and then Agrani Bank Limited as the Managing Director & Chief Executive Of cer from 2004
to 2010.
In recognition as a successful banker, he has been awarded several prestigious awards in
several times such as Artho Banijjo Financial Performance Award (2009), Chandraboti Gold
Medal (2008), World Strategy Summit Strategy Leadership Award (2007), Dhara Gold
Medal (2006 & 2005), Nawab Sir Salimullah Gold Medal (2005), Financial News Services
Business Gold Medal (2005) and C.R. Das Gold Medal (2004). Mr. Ahmed is the Ex-Chairman
of Bangladesh Foreign Exchange Dealers Association, and former Governing Body Member
of Association of Bankers, Bangladesh, Bangladesh Institute of Bank Management and
The Institute of Bankers, Bangladesh. He is the former Vice-Chairman of Primary Dealers
Association of Bangladesh.
He is also the former Director of Bangladesh Commerce Bank Limited and Investment
Corporation of Bangladesh and currently one of the Independent Directors of Dhaka Bank
Limited.
Mr. Farooq Sobhan is the President and Chief Executive of Bangladesh Enterprise
Institute (BEI). Mr. Sobhan was Executive Chairman, Board of Investment and
Special Envoy to the Prime Minister 1997-1999, Foreign Secretary 1995-1997,
High Commissioner to India 1992-1995, Ambassador to China 1987-1991, High-
Commissioner to Malaysia 1984-1987, Ambassador and Deputy Permanent
Representative to the United Nations 1981-1984. He served as Chairman of the
Group of 77 at the UN 1982-1983 and was Chairman, UN Commission on TNCs
between 1991-1992.
Mr. Sobhan is a Member of the International Research Committee of the Centre for
Security Studies, Colombo. He is a member of the Board of Governors of the South
Asia Centre for Policy Studies (SACEPS), based in Kathmandu and was Co-Chairman
of the Coalition for South Asian Co-operation (CASAC) from 1994-2001. He has
written extensively on the subject of regional co-operation in South Asia and is
currently involved in a number of initiatives in the region.
Farooq Sobhan
Independent Director
Syed Abu Naser Bukhtear Ahmed
Selim R. F. Hussain
Ex Of cio
22 COMMITTEES OF THE BOARD & MANAGEMENT
Committees of the Board & Management
Executive Committee, and
Audit Committee
All other committees of IDLC are formed under the
jurisdiction of the management.
Executive Committee (EC)
The matter related to ordinary business operations
of the Company and the matters that the Board of
Directors authorizes from time to time are vested on this
Committee.
Composition of Executive committee
Incompliance with the referred circular, the EC consists
of fve members. The members are as follows:
Chairman
Rubel Aziz
Members
K. Mahmood Sattar
Md. Rezaul Karim
M. Amanullah
Selim R. F. Hussain
Audit Committee (AC)
The Committee is empowered, among other things, to
examine any matter relating to the fnancial afairs of the
Company and to review all audit and inspection reports,
internal control systems and procedures, accounting
policies and adherence to compliance requirements, etc.
Composition of Audit Committee
The AC consists of fve members. The members are as
follows:
Chairman
Farooq Sobhan
Members
Anwarul Huq
Rubel Aziz
Md. Rezaul Karim
Management Committee (ManCom)
The Management Committee is tasked with making
key decisions for the Companys management and
operations, under the of cial delegation of authority
from the Board. The Committee is comprised of senior
executives who are from various key functions and
operations of the Company.
Composition of ManCom
Selim R. F. Hussain, CEO & Managing Director
H. M. Ziaul Hoque Khan, FCA
Deputy Managing Director & CFO
M. Jamal Uddin, Head of Corporate Division
Mir Tariquzzaman, Chief Technology Of cer (CTO)
Asif Saad Bin Shams, Head of Credit & Collection
Zahid Ibne Hai, Head of SME Division
Bilquis Jahan, Head of Human Resources
Irteza A. Khan, Head of Consumer Division
M. Ataur Rahman Chowdhury, Head of Operations
Mustaq Ahammed, FCA, Head of Internal Control & Compliance
Md. Saifuddin, Managing Director, IDLC Securities Limited
Md. Moniruzzaman, CFA, Managing Director,

Credit Evaluation Committee (CEC)
CEC evaluates all projects/proposals of fnancing
activities of the Company from risk point of view.
Composition of CEC
Asset Liability Management Committee (ALCO)
The main responsibilities of ALCO are to look after
the Financial Market activities, manage liquidity and
As per DFIM Circular Letter No. 18, dated October 26, 2011 of Bangladesh Bank on the policy regarding the
responsibility and accountability of the Board of Directors, Chairman and Chief Executive Of cer/Managing Director
of the Financial Institutions, the Board of Directors of IDLC formed two sub-committees of the Board:
OUR MANAGEMENT
Annual Report 2012
23 COMMITTEES OF THE BOARD & MANAGEMENT
interest rate risk, understand the market position and
competition etc. In carrying out its responsibilities, the
ALCO convene periodical meeting & regularly reviews
the decisions of the meeting with due consideration of
the market situation.
Composition of ALCO
Chairman
Members
Md. Moniruzzaman, CFA, Managing Director,
Md. Saifuddin, Managing Director,
Mohammad Abdul Ohab Miah, FCA, CFO of
Capital Market operations
Member & Organizer
H S Tareq Ahmed, Head of Treasury
Internal Control Committee
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.
Composition of the Committee
Head of business units
HR & Compensation Committee
The principal purpose of the Committee is to assist the
management in fulflling its corporate governance and
oversight responsibilities in relation to establishing people
management and remuneration policies.
Composition of HR & Compensation Committee
Head of business units
Corporate Governance Committee
The committee ensures the corporate governance practice
within the Company as required by the Bangladesh
Securities and Exchange Commission (BSEC) and
Bangladesh Bank. The committee also recommends and
advises course of actions in the areas where there is a
scope of improvement.
Composition of Corporate Governance Committee
BASEL Implementation Committee
The BASEL Implementation Committee is responsible for the
implementation of BASEL Accord for Financial Institution
(BAFI) in IDLC. Managing risk based capital adequacy is
the most important responsibility of the committee. The
BASEL Implementation Desk (BID) of the Risk Management
Department manages the BASEL activities. The results of
risk based capital analysis along with recommendation
are placed in the committee meeting by the BID where
important decisions are made to maintain Minimum/
Regulatory Capital and manage related risk.
Composition of BASEL Implementation Committee
Ethics and Compliance Committee
The committee supervises the ethical business practices
of the diferent units of the company. It also ensures the
compliance with the stated conduct and Code of Ethics of
the Company.
Composition of Ethics and Compliance Committee
OUR MANAGEMENT
Annual Report 2012
24 MANAGEMENT & EXECUTIVES
Management & Executives
M. Jamal Uddin
Head of Corporate Division
Bilquis Jahan
Head of Human Resources
Selim R. F. Hussain
Zahid Ibne Hai
Head of SME Division
M. Ataur Rahman Chowdhury
Head of Operations
Md. Saifuddin
Managing Director, IDLCSL
Mustaq Ahammed, FCA
Head of ICC
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Annual Report 2012
Management Committee (ManCom)
Asif Saad Bin Shams
Head of Credit & Collection
Md. Moniruzzaman, CFA
Managing Director, IDLCIL
Mir Tariquzzaman
Chief Technology Of cer
Irteza A. Khan
Head of Consumer Division
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Annual Report 2012
Senior Executives (In alphabetic order of last name)
Mesbah Uddin Ahmed
Head of Structured Finance
Bidyut Kanti Das
Head of Sylhet Region
H S Tareq Ahmed
Head of Treasury
Rajib Kumar Dey
Head of Market Research and Proprietary
Management, IDLC Investments Ltd.
Zurat Haque
Head of CSR
Md. Al-Amin
Head of Medium Enterprise Finance
Rubayet-E-Ferdous
COO, IDLC Investments Ltd.
M. Maksudul Hoque
Head of Administration
OUR MANAGEMENT
Annual Report 2012
OUR MANAGEMENT
Annual Report 2012
Shafayet Hossain
Head of Special Asset Management
Indrajit Mallick
Head of Chittagong Region
Md. Mohidur Rahman
Head of Small Enterprise Finance
Head of Statutory Reporting &
Company Secretary
Mohammad Abdul Ohab Miah
CFO, Capital Market Operations
Ifham Siddiqui
Cluster Head, Gulshan
Md. Masud K. Majumder
Head of Finance
Laila Nasrin
Head of Software Solutions
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OUR GOVERNANCE
Annual Report 2012
STATEMENT OF RISK MANAGEMENT
Statement of Risk Management
IDLC defnes risk as the levels of potential losses or
profts foregone due to internal or external factors.
Risk is an integral part of fnancing business. Risk
management entails the adoption of several measures
to strengthen the ability of an organization to cope with
the vagaries of the complex business environment in
which it operates.
Disciplined risk management and control are essential
to our success. The approach to risk is founded on
strong Corporate Governance practices that are
intended to strengthen the enterprise risk management
of IDLC, whilst also positioning IDLC to manage the
changing regulatory environment in an efective
and ef cient manner. Risk management governance
starts with our Board, which plays an important role in
reviewing and approving risk management policies and
practices. The companys governance structure provides
the protocol and responsibility for decision-making on
risk management issues and ensures implementation
of those decisions. We maintain strong communication
about risk and we have a culture of collaboration in
decision-making among the revenue-producing units,
independent control and support functions, committees
and senior management. In addition to have the
industry best practices for assessing, identifying and
measuring risks, IDLC also considers Guidelines for
Managing Core Risks of fnancial institutions issued
by the Countrys Central Bank, Bangladesh Bank; vide
FID Circular No. 10 dated September 18, 2005 for
management of risks.
IDLCs risk management capabilities are supported
by a strong management structure and information
system, an efective risk rating system and robust
policies. The primary objectives of risk management
are to protect IDLCs fnancial strength and reputation,
while ensuring that capital is well deployed to support
business activities and grow shareholder value. Efective
risk management coupled with adoption of Basel II
recommendations; beneft IDLC by providing more
ef cient capitalization and lower costs to risk and
funding.
KEY DEVELOPMENTS IN 2012
In 2012, we continued to make signifcant investments
in our infrastructure, processes, methodologies
and people to ensure that our risk frameworks are
suf ciently robust to support our business aspirations
and risk appetite.
Areas of progress include:
improving risk management approaches and
methodologies;
refning the understanding of the risks faced by
IDLC and their scale against capital allocation
establishing new policies and enhancing the
existing ones;
working towards compliance with Basel II;
improving the quality of data, including forward
looking measures;
improving stress-testing capabilities and
embedding them across the Group; and
investing signifcantly in the IT infrastructure and
enhancing skills of staf by providing training on
an ongoing basis.
RISK TYPES
We have comprehensive risk management processes
through which we monitor, evaluate and manage the
risks we assume in conducting our activities. These
include credit, market, liquidity and operational risk
exposures.
Defnitions of primary and consequential risks :
Credit Risk: The risk of loss resulting from the failure
of a client or counterparty to meet its contractual
obligations. At IDLC, credit risk may arise in the following
forms:
Default risk
Credit Concentration risk
Recovery risk
Counter party risk
Related party risk
IDLCs risk management capabilities are supported by a strong management
structure and information system, an efective risk rating system and robust policies.
The primary objectives of risk management are to protect IDLCs fnancial strength
and reputation, while ensuring that capital is well deployed to support business
activities and grow shareholder value...
29
OUR GOVERNANCE
Annual Report 2012
Market Risk: The risk of loss resulting from changes
in market variables such as interest rates, prices
of securities, equity index levels, exchange rates,
commodity prices and general credit spreads.
Liquidity and Funding Risk: The risk of being unable
either to meet our payment obligations when due or
to borrow funds in the market at an acceptable price to
fund actual or proposed commitments.
Operational Risk: The risk of loss resulting from
inadequate or failed internal processes, people and
systems, or the risk of a loss resulting from external
causes, whether deliberate, accidental or natural. Other
related operational risks are:
Legal risk
Reputational risk
Compliance risk
Strategic risk
These diverse risks are explained as follows:
Processing risk
The risk related to the execution and maintenance
of transactions, and the various aspects of running a
business, including products and services.
People risk
The risk of loss intentionally or unintentionally caused
by an employee e.g. employee error, employee
misdeeds or involving employees, such as in the area
of employment disputes.
Systems risk
The risk of loss caused by piracy, theft, failure,
breakdown or other disruption in technology, data or
information; also includes technology that fails to meet
business needs.
External risk
The risk of loss due to damage to physical property or
assets from natural or nonnatural causes. This category
also includes the risk presented by actions of external
parties, such as the perpetration of fraud, or in the case
of regulators, the execution of change that would alter
the companys ability to continue operating in certain
markets.
IDLC distinguishes between quantifable risks those
to which a value can normally be attached in fnancial
statements or in regulatory capital requirements and
non-quantifable types of risk such as strategic/business,
reputational, and compliance risk. Certain business risks
arise from the commercial, strategic and economic risks
inherent in our business activities. These are overseen
and managed by the frms respective business and
group management.

Business Volume Risk: 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
afect proftability due to volatile revenues and reduced
spread earnings, credit rating and reputation. Risk of
over trading may lead to insuf cient capital.
Reputational Risk: The risk related to the
trustworthiness of business. Damage to a frms
reputation can result in lost revenue or destruction of
shareholder value, even if the company is not found
guilty of a crime. Reputational risk can be a matter
of corporate trust, but serves also as a tool in crisis
prevention.
Project Risk: This is about particular risks associated
with the undertaking of a project. If projects undertaken
by the company is not compatible with it and not
feasible because of existing market scenario, the
company may run the risk of encumbered by loss
projects.
Technology Risk: It is the process of managing
the risks associated with implementation of new
technology. If a new technology is not compatible with
business function of the company, the company may
sufer in the long run. A non-compatible technology
30
not only brings dif culty in all sorts of operations of
the company but also run the risk of wasting money
choosing the wrong one.
Integrated Risk: Integrated risk management refers to
integrating risk data into the strategic decision making
of the company and taking decisions, which take into
account the set risk tolerance degrees of a department.
In other words, it is the supervision of market, credit
and liquidity risk at the same time or on a simultaneous
basis.
RISK MANAGEMENT AND CONTROL PRINCIPLES
Five pillars support our eforts to achieve an appropriate
balance between risk and return:
1. Protecting the fnancial strength of IDLC by
controlling our risk exposures and avoiding potential
risk concentrations at the level of individual
exposures, at specifc portfolio levels and at an
aggregate frm-wide level across all risk types.
2. Reputation protection through a sound risk
culture characterized by a holistic and integrated
view of risk, performance and reward, and by full
compliance with our standards and principles,
particularly our Code of Conduct.
3. Management accountability whereby business
management, as opposed to risk control, owns all
risks assumed throughout the frm and is responsible
for the continuous and active management of all
risk exposures to ensure that risk and return are
balanced.
4. Independent control functions which monitor the
efectiveness of the businesss risk management and
oversee risk-taking activities.
5. Comprehensive and transparent disclosure of risks
to senior management, the Board of Directors,
shareholders, regulators, rating agencies and other
stakeholders.
Figure: Risk Management Steps at IDLC
RISK MANAGEMENT STRATEGIES
Credit Risk Management
Figure: Credit Risk Management Process
Credit Approval Process
IDLCs credit processes are designed with the aim
of combining an appropriate level of authority in its
credit approval processes with timely and responsive
decision-making and customer services. The process for
each division is tailored to the risk profle and service
requirements of its customers and product portfolio.
A credit policy, approved by the board, is in place at
IDLC, which is well communicated with all business
divisions and is followed strictly before any sanction.
Key parameters, associated with credit structuring and
approval, are periodically reviewed to ensure their
continued relevance.
The credit appraisal and measurement process,
leading to approval/rejection, is segregated from loan
origination in order to maintain the independence
and integrity of credit decision making. The Credit
Evaluation Committee (CEC) regularly meets to review
the market and credit risk related to lending and
recommend and implement appropriate measures
to counter associated risks. The CEC critically reviews
projects considering the current global fnancial crisis
and its probable impact on the project. An independent
Credit Risk Management (CRM) Department is in place,
at IDLC, to scrutinize projects from a risk-weighted point
of view and assist the management in creating a high
quality credit portfolio and maximize returns from risk
assets.
OUR GOVERNANCE
Annual Report 2012
31
IDLC has multiple levels of credit approval authority
depending on the size of the proposed credit exposure,
expected cash fows, credit worthiness of the borrower
and security ofered. The credit limit, which is proposed
in the credit application, will serve as a basis to
determine appropriate credit risk approval levels. All
assigned credit authorities are reviewed on a periodic
basis with a minimum cycle of at least once a year
to ensure that they are adequate to the individual
performance of the authority holder.

Credit Risk Measurement
IDLCs main objective of credit risk measurement
is to use various tools to support quantitative risk
assessment from the level of individual facilities up
to the total portfolio, including element of the credit
approval process, ongoing credit risk management,
monitoring and reporting and portfolio analysis.
IDLC searches for credit report from the Credit
Information Bureau (CIB) of Bangladesh Bank. The
report is scrutinized by CRM and CEC to understand the
liability condition and repayment behavior of the client.
Depending on the report, bankers opinions are taken
from clients banks. Suppliers and buyers opinion are
taken to understand the market position and reputation
of our proposed customers.
Ongoing active monitoring and management of
credit risk positions is an integral part of the credit
risk management activities. Research team of CRM
regularly reviews market situation and exposure of
IDLC in various industrial sub-sectors. IDLC aims to
identify counterparties that demonstrate the likelihood
of problems well in advance, on the basis of the
application of the risk management tools in order to
efectively manage the credit exposure and maximize
the recovery. Measurement tools include credit rating
systems, which are used in the calculation of regulatory
and economic capital, and stress testing.
Internal Rating System
IDLC has been developing and managing Risk Grading
Model (RGM) to promote the safety and soundness of
the Company by facilitating informed decision-making.
This model measures credit risk and diferentiate
individual credits and groups of credits by the risk they
pose. IDLC has diferent internal rating tools to assess
the credit risk on Corporate clients, SME clients and
Retail Banking clients.
Credit ratings are based on the analysis and evaluation
of both quantitative and qualitative factors. The
specifc factors analyzed are dependent on the type
of counterparty. The analysis emphasizes a forward
looking approach, concentrating on economic trends
and fnancial fundamentals. Credit of cers make use of
peer analysis, industry comparisons, external ratings,
research and the judgment of credit specialists. At
the time of initial credit approval and review, relevant
quantitative data (such as fnancial statements and
fnancial projections) and qualitative factors relating
to the counterparty are used in the measurement
tools which results in the assignment of a credit rating.
IDLC uses a rating scale ranging from 18 whereby
the 13 risk rates are tagged as satisfactory and above
satisfactory and the 4-5 risk rates are tagged as average
risks. Any client, whose rating is less than 6, may not be
considered for loan. This process allows management to
monitor changes and trends in risk levels and manage
risks to optimize returns.
Stress Testing
IDLC complements its regular standardized risk
reporting process with stress tests to capture the
efect of exceptional but plausible events on the
capital and liquidity position of the company. IDLC has
been following the stress testing guidelines issued
by Bangladesh Bank (BB) since 2010. The guidelines
were revised for the NBFIs in June 2012 after thorough
analysis of the situational requirements and future
perspectives. IDLC uses regular stress tests to calculate
the credit exposures, including potential concentrations
that would result from applying shocks to credit risk
factors (e.g., interest rates, equity prices). These shocks
include a wide range of moderate and more extreme
market movements. Stress tests are regularly conducted
jointly with the frms market and liquidity risk functions.
Stress testing quantifes our exposures to plausible yet
extreme and unusual market movements, and enables
us to identify, understand and manage our potential
vulnerabilities and risk concentrations.
Credit Risk Mitigation
IDLC employs various credit risk mitigation techniques
to optimize credit exposure and reduce credit losses.
These techniques are used in a consistent manner
and are reviewed periodically to meet operational
management risk requirements for their legal, practical
and timely enforceability.
A key focus of IDLCs credit risk management approach
is to avoid any undue concentrations in its credit
portfolio, whether in terms of counterparty, group,
sector, or product. IDLCs portfolio management
supports a comprehensive assessment of
concentrations within its credit risk portfolio for
provision of subsequent risk mitigating actions and
diversifcation across various geographical boundaries,
OUR GOVERNANCE
Annual Report 2012
32
sectors, borrower groups and products, with the main
objective of maximizing shareholder value. The analysis
is used to determine strategies for both portfolio and
individual counterparties within the portfolio, based on
their risk/reward profle and potential.
The use and approach to credit risk mitigation varies
by product type, customer and business strategy.
Mitigation techniques used are:
Credit Limits (Individual & Group)
IDLC has a set of prudential limits approved by the
Board to address concentration of risk by counterparties.
These allow higher exposures to better rated customers
and lower exposures to lower rated customers. Excesses
beyond tolerance limits are considered on a case by case
basis at the time of credit sanctioning, and are reported
quarterly to the Board.
An important aspect of the IDLC credit review is focus
on the asset to be fnanced and the expected cash
fow, in order, to minimize the probability that IDLC will
experience losses from late and delinquent payment.
Therefore, the creditworthiness of the borrower is
determined based on its reliability and ability to pay.
Sustainable Cash Flow
Measures of reliability include credit payment history,
references from current and past suppliers, and the
qualitative character of the management or owners;
Projected cash fows are used to demonstrate that the
applicant can generate enough revenue and consistent
cash fow to pay payments
within terms. This includes
evidence that the business
has been and continues to be
operating successfully and
paying its bills on time.
Collateral is security in the
form of an asset or third-
party obligation that serves
to mitigate the inherent risk
of credit loss in an exposure,
by either substituting the
borrower default risk or
improving recoveries in the
event of a default.
The main types of collateral
taken comprise cash and
cash equivalent instruments,
properties (residential,
commercial and industrial),
capital funds, plant and
equipment.
Collateral
Realizable value of collateral is computed on a
conservative view of current market prices, suitably
discounted for price volatility and the lack of ready
market for assets. All realization costs are taken into
account.
Collaterals taken by IDLC are well documented to
ensure that credit risk mitigation is legally efective and
enforceable.
IDLC in some cases holds guarantees, letters of credit
and similar instruments from third parties which enable
it to claim settlement from them in the event of default
on the part of the counterparty.
Risk Transfer
Guarantor counterparties include banks, parent
companies, shareholders and associated counterparties.
Creditworthiness is established for the guarantor for
counterparty credit approvals.
IDLCs Credit Risk Profle
IDLC enjoys a well diversifed credit portfolio of the
economy whereby the credit risk is spread across
diferent portfolios of the economy as detailed below.
It is also to be noted that as at 31 December 2012, all
the sectors were within their internal prudential limits
approved by the Board.
Sector wise exposure December 31, 2012
OUR GOVERNANCE
Annual Report 2012
33
Credit Risk Concentration Limits
Large credit concentrations, notably concentrations
over 15% of the companys capital base are reported (i)
quarterly to the Risk Management Committee and (ii)
quarterly to the Central Bank. IDLC complies with the
following regulatory and internal prudential limits: a)
Credit exposure to a single customer or any group of
closely related customers shall not exceed 30% of its
capital base; and b) Credit exposure to a single sector
shall not exceed 25% of the IDLCs total portfolio. These
limits are also in line with the central bank guidelines. As
at 31 December 2012, no regulatory limit and prudential
limit were exceeded in respect of credit concentration
risk.
The following table provides a breakdown of IDLCs top
10 group and top 10 sector exposures:
TOP 10 GROUP EXPOSURES
BDT million
Name
Net
Exposure
% of IDLCs
Equity
Acme Group 580.92 15.35%
City Group 474.88 12.55%
Meghna Group 365.79 9.67%
Hamdard Laboratories 359.92 9.51%
Noman Group 343.44 9.08%
Elite Paint Group 259.77 6.87%
PRAN Group 258.26 6.83%
Kallol Group 250.99 6.63%
Al-Noor Group 212.21 5.61%
Standard Chartered 205.28 5.43%
TOP 10 SECTOR EXPOSURES
BDT million
Sector
Net
Exposure
% of
Portfolio
Apparels & Accessories 1,967 10.70%
Food and Beverage 1,807 9.83%
Transport 1,521 8.27%
Pharmaceuticals 1,219 6.63%
Housing & Real Estate 1,137 6.18%
Household Products &
Home Appliances
1,076 5.85%
Service 1,046 5.69%
Building Materials 980 5.33%
Iron & Steel 944 5.13%
Textiles Local 818 4.45%
Periodic Analysis of the Management Program
All policies of IDLC are periodically modifed. This
modifcation is made within two years of each approval.
Product Program Guidelines (PPG) for diferent products
is analyzed every year. This measure helps IDLC to
cope with current market situation and changes in the
industry.
Monthly meeting is held between CRM, SAM and
Collection team highlighting the learning from the
special clients. This helps IDLC in making better policies
to improve its assets. It also works as screening system
and gives early warning to IDLC about a client/ industry.
Market Risk Management
At IDLC, market risk may arise in the following forms:
Interest rate risk: Interest rate risk is the
exposure of IDLCs fnancial condition to adverse
movements in interest rates arising from
repricing and/or maturity mismatches, changes
in underlying rates and other characteristics
of assets and liabilities in the normal course of
business.
Equity price risk: results from exposures to
changes in prices and volatilities of individual
equities, baskets of equities and equity indices.
IDLCs Credit Policy ensures that exposures are
suf ciently diversifed and within the companys
risk appetite.
The Asset Liability Management Committee (ALCO) of
the Company regularly meets to assess the prevailing
market risk. ALCO members analyze the changes in
interest rate, market conditions, carry out asset liability
maturity gap analysis, re-pricing of products and
thereby take efective measures to monitor and control
interest rate risk.
IDLC clearly defnes policies and procedures for
limiting and controlling interest rate risk by delineating
responsibility and accountability over interest rate
risk management decisions and defning authorized
instruments and position taking opportunities.
ALCO ensures that the company follows policies and
procedures that enable the management of interest
rate risk. These include maintaining an interest rate
risk management review process, appropriate limits on
risk taking, adequate systems of risk measurement, a
comprehensive interest rate risk reporting system, and
efective internal controls. Interest rate reports for the
top management includes summaries of the Companys
aggregate exposures, compliance with policies and
limits, summaries of reviews of interest rate risk policies
OUR GOVERNANCE
Annual Report 2012
34
and procedures, and fndings of internal and external
auditors.
IDLC has an ef cient and efective management
information system for measuring, monitoring,
controlling and reporting interest rate exposures. The
interest rate risk management systems assess the efects
of rate changes on both the earnings and economic
value. Interest rate risk in new products is identifed
by carefully scrutinizing the maturity, re-pricing or
repayment terms of an instrument. IDLC considers the
worse case scenarios and ensures that appropriate
contingency plans are available to tackle these
situations.
IDLC has adequate system of internal controls to ensure
the integrity of its interest rate risk management
process and to promote efective and ef cient
operations, reliable fnancial and regulatory reporting,
and compliance with relevant laws, regulations, and
institutional policies.
Liquidity Risk Management
Liquidity is of critical importance to fnancial institutions.
Most of the recent failures of fnancial institutions have
occurred in large part due to insuf cient liquidity.
Accordingly, IDLC has in place a comprehensive and
conservative set of liquidity and funding policies to
address both frm-specifc and broader industry or
market liquidity events. Our principal objective is to be
able to fund the frm and to enable our core businesses
to continue to generate revenues, even under adverse
circumstances.
We manage liquidity risk according to the following
principles:
Asset-Liability Management: We assess anticipated
holding periods for our assets and their expected
liquidity in a stressed environment. We manage
the maturities and diversity of our funding across
markets, products and counterparties, and seek to
maintain liabilities of appropriate tenor relative to
our asset base.
Liquidity cushion: We maintain a liquidity cushion
to meet a broad range of potential cash outfows
and collateral needs in a stressed environment.
The cushion fund is invested in a manner which
emphasizes the need for security and liquidity.
Our liquidity and funding strategy is proposed by
Treasury, approved by ALCO and overseen by the Board
of Directors (BoD). Liquidity and funding limits are
set at Group and business division levels, taking into
consideration current and projected business strategy
and risk tolerance. Performance is monitored against
limits and targets and regularly communicated to senior
management. These limits and targets are periodically
reviewed and reconfrmed by the respective authorities.
Liquidity requirements are managed on a day-to-day
basis by the Treasury department which is responsible
for ensuring that suf cient funds are available to meet
short term obligations, even in a crisis scenario, and
for maintaining a diversity of funding sources. Treasury
department maintains liquidity based on historical
requirements, anticipated funding requirements from
operation, current liquidity position, collections from
fnancing, available sources of funds and risks and
returns. We aim to maintain a sound liquidity position to
meet all our liabilities when due, whether under normal
or stressed conditions.
IDLC has been following the stress testing guidelines
issued by Bangladesh Bank (BB) since 2010. The
guidelines were revised for the NBFIs in June 2012
after thorough analysis of the situational requirements
and future perspectives. IDLC performs regular stress
analysis to determine the asset / liability structure
that allows the company to maintain an appropriately
balanced liquidity and funding position under various
scenarios. Furthermore, IDLC manages its liquidity and
funding risk with the overall objective of optimizing the
value of the business across a broad range of temporal
market conditions.
In 2012, we continued to maintain a sound liquidity
position and a diversifed portfolio of funding sources.
IDLCs funding and liquidity position is supported by its
large and well diversifed non-bank customer deposit
base which accounts for 84% of the funding base. Our
funding activities are planned after analyzing the overall
liquidity and funding profle of our balance sheet, taking
into account the amount of stable funding that would
be needed to support ongoing business activities.
To confront any liquidity crisis, IDLC has a liquidity
contingency plan based on operational requirements
for the next six (6) months.
OUR GOVERNANCE
Annual Report 2012
35
IDLC has adequate internal controls over its liquidity
risk management process that is a part of the overall
system of internal control. An efective system has
created a strong control environment and has an
adequate process of identifying and evaluating liquidity
risk. It has adequate information system that produces
regular independent reports and evaluations to review
adherence to established policies and procedures.
A summary of Lease/Loan classifcation and provision
for two consecutive years 2012 and 2011 is presented
below to forecast future requirement of fund and
understand present collections from fnancing:
BDT in million
2012 2011
Unclassifed (UC) Standard 29,982 24,610
*SMA 311 336
Classifed *SS 166 76
*DF 139 57
*B/L 341 461
Total Balance Outstanding of
Loan and Lease amount 30,939 25,540
*SMA= Special Mention Account; *SS= Sub-standard; *DF= Doubtful;
*B/L= Bad or Loss
Operational Risk Management
Operational risk is the risk resulting from inadequate
or failed internal processes, human error and systems
failure, or from external causes (deliberate, accidental or
natural). Such events may cause direct fnancial losses
or manifest themselves indirectly as revenue forgone
due to the suspension of business. They may also result
in damage to our reputation causing longer-term
fnancial implications. Operational risk is an inevitable
consequence of being in business, and managing it is a
core element of our business activities.
Managing operational risk requires timely and accurate
information as well as a strong control culture. We seek
to manage our operational risk through:
the training, supervision and development of our
people;
the active participation of senior management in
identifying and mitigating key operational risks
across the frm;
independent control and support functions that
monitor operational risk on a daily basis and have
instituted extensive policies and procedures and
implemented controls designed to prevent the
occurrence of operational risk events;
proactive communication between our revenue-
producing units and our independent control and
support functions; and
a network of systems throughout the frm to
facilitate the collection of data used to analyze and
assess our operational risk exposure.
Appropriate internal control measures are in place,
at IDLC, to address operational risks. IDLC has
also established Internal Control and Compliance
Department (ICC) to address operational risk and to
frame and implement policies to encounter such risks.
In line with regulatory requirements, the ICC unit is
responsible for the following:
The ICC unit assesses compliance with applicable
laws & regulations, codes and guidelines, internal
procedures and policies. Timely compliance
audits are efected where compliance with laws/
regulations/guidelines are critical and appropriate
recommendations for enhancement in processes
and controls are made.
The ICC unit tracks transactions and reports any
suspicious transactions to the local designated
authority. It also imparts training on anti-money
laundering to staf in order to enable them to
mitigate compliance risks as recommended by the
local regulators.
The ICC unit also acts as a contact point within IDLC
and delivers timely advice in relation to compliance
queries emanating within the company.
A Complaint Cell has been formed, in line with the
DFIM circular 13/2011, to ensure prompt settlement
of the complaints received. In addition to this,
a separate webpage - Feedback ( http://www.
idlc.com/feedback.php ) has been created and a
suggestion box has placed in each branch and of ce
of IDLC to receive complaints.
A proper credit administration at IDLC includes ef cient
and efective operations related to monitoring,
documentation, contractual requirements, legal
OUR GOVERNANCE
Annual Report 2012
36
covenants, collateral, etc., accurate and timely reporting
to management, and compliance with management
policies and procedures and applicable rules and
regulations.
All businesses of IDLC are audited to assess control
adequacy and efectiveness from a process perspective.
IDLC gathers information of diferent risks from reports
and plans that are published within the institution
(like audit reports, regulatory reports, management
reports, business plans, operations plans, etc.). A
careful review of these documents reveals gaps that
can represent potential risks. The data from the reports
are then categorized into internal and external factors
and converted into likelihood of potential loss to the
institution.
The work performed by internal audit is taken into
consideration by the statutory auditors for the purpose
of forming an opinion on the Financial Statements
of the company. As part of their statutory duties, the
external auditors also conduct yearly independent
process reviews and report directly to the Audit
Committee.
Business Volume Risk Management
To encounter and mitigate business volume risk the
following risk mitigation measures are in place, at IDLC:
Regular review of impact of global economic
meltdown and taking appropriate measure;
Innovative and convenient fnancial products and
services;
Taking prompt action on customer complaints;
Frequent assessment of clients satisfaction;
Regular review of performance against budget and
targets;
Review and analysis of competitors performance;
Adequacy of Risk Management Processes
IDLC has well established processes for management
of all material risks that are associated with its business
activities. IDLCs policy is to maintain a strong core
capital and to utilize it ef ciently throughout its
activities with the objective of optimizing the return
to shareholders while maintaining a prudent balance
between the core capital and the underlying risks of the
business.
The capital management process ensures that each
entity/segment maintains suf cient capital levels for
legal/regulatory compliance purposes and to meet
Basel II requirements, besides holding a cushion for
uncertainties and supporting depositors confdence.
We estimate our risk exposure based on our own
assessment of the operations as well as the market
perception to be as follows:
Type of Risk Rating
Credit Risk Moderate
Market Risk Moderate
Liquidity Risk Moderate
Operational Risk Low
Business Volume Risk Low
OUR GOVERNANCE
Annual Report 2012
37
Treasury Functions
In IDLC, Treasury departments priorities are to ensure
liquidity at an optimum cost and at the same time
explore new funding avenues to minimize the Cost
of Funds (COF). Carrying out the functions of liquidity
management, inter-bank operations and pertinent risk
management, IDLCs Treasury considers the following
attributes as the core of its competencies:
In the fast moving fnancial landscape, the traditional
treasury activities such as day to day funding and
transaction processing are becoming less value adding.
Hence Treasury is more focused on becoming a strategic
business partner with both internal & external stake-
holders across all areas of the business now. With the
help of the newly implemented core banking system,
increased emphasis on control and governance has
highlighted treasury activities as control functions in
themselves, which Treasury considers an opportunity
to add value by monitoring, analyzing and reporting
underlying business and balance sheet risks. The scope
of Treasurys role is streamlined in four distinctive arenas.
Liquidity Planning and Management
Forecasting business demands
Fund raising through diversifed channel
Projection monitoring
Transaction Management
Day to day fund mangement
Transaction processing
Financial Risk Management
Balance sheet risk
Interest rate risk
Contingency liquidity planning
Management Advice
Conducting monthly ALCO meeting

Money Market Scenario and our priorities in 2012
2012 was clearly a year of two halves as long as money
market was concerned, with the despair seen in H1
reversed to optimism following the slew of monetary
and fscal measures.
Demand for interbank liquidity remained high in Q1
with overnight rates hovering mostly in the 18-20%
range which began to soften near the end of Mar12 and
by Jun12, call money rate came down to 12-15% range.
In H2, the call money rate moved down further and
reached between 8-10% in Dec12.
Our Treasury
In the fast moving fnancial landscape, the traditional treasury activities such as
day to day funding and transaction processing are becoming less value adding.
Hence treasury is more focused on becoming a strategic business partner with
both internal & external stake-holders across all areas of the business now...
OUR TREASURY
OUR GOVERNANCE
Annual Report 2012
38 OUR TREASURY
Source: Statistics Department, Bangladesh Bank
Yield on treasury bills and bonds showed a general
upward trend till the third quarter of the year when the
central bank re-introduced the 30-day Bangladesh Bank
Bills and reduced tenor eligibility for Assured Liquidity
Support (ALS) back to 60 days from 75 days in Dec12.
Though gradual and steady move towards stability
marked the local currency money market in 2012,
control of money supply in curbing infation somewhat
kept the market tumultuous and posed the following
key challenges on Treasury:
Ensure suf cient liquidity for IDLC
Maintain minimum dependency on volatile call
money market
Contain cost of funds within tolerable limits , and
Maintain ALM/ Regulatory indicators within the
threshold limit
Underneath is furnished a brief description of Treasurys
performance in 2012
Liquidity Management
The main objective of liquidity management is to
ensure suf cient funds to meet all of ones fnancial
commitments in a timely and cost efective manner.
In IDLC, liquidity management involves forecasting
funding requirements, maintaining suf cient capacity
to meet the fnancial needs and accommodating
fuctuations in asset and liability levels.
In the face of fckle market scenario, IDLC performed
excellent in meeting its funding objectives in 2012
and further enhanced its liquidity position. To ensure
adequate liquidity in an adverse market scenario, the
ALCO constantly monitored the maturity of its payments
and settlement obligations, asset growth demand
and accordingly strategized well poised plans to meet
the liquidity requirements from dependable funding
avenues in desired time buckets, which was supported
mainly by a robust and steady growth of customer
deposit base.
Deposit has been the prime funding source of IDLC for
the last couple of years. Increasing visibility in retail
market and growing market awareness about IDLC and
its products opened up the opportunity to strike a major
boost in deposit basket growth in 2012. As of December
31, 2012, IDLCs total term deposit amount was BDT
2200 cr. - the highest deposit bases among all NBFIs.
During the year deposit basket grew by BDT 517 cr. and
posted 31% year-on-year growth. It is mentionable that,
57% of the deposits were sourced from retail depositors
which are considered to be more stable and less rate
sensitive than the institutional deposits.
While managing liquidity, Treasury continued its focus
on reducing reliance on costlier intermediarys funds like
conventional borrowing from the commercial banks. In
2012, IDLC witnessed a major stride in both frontiers;
while deposits contributed 83% of IDLCs funding
portfolio which was 79% in earlier year and bank
borrowing stood only 5% of total funding basket over
10% in previous year.
Shift in Funding mix
OUR GOVERNANCE
Annual Report 2012
39 OUR TREASURY
Besides deposit mobilization, strong focus was laid
on utilization of Bangladesh Banks (BB) refnancing
windows, the lowest cost long term funding avenue
for IDLC. IDLC is currently participating in Small and
Medium Enterprise (SME) Refnancing schemes, Women
Entrepreneur refnance scheme and Agro refnancing
scheme of Bangladesh Bank. During 2012 IDLC received
BDT 119 cr. long term refnance from Bangladesh Bank
and outstanding refnance balance stood at BDT 254 cr.
posting a 51% year-on-year growth which contributed
signifcantly to lessen asset-liability mismatch and
diversify the funding basket.
(BDT Cr.)
Dec -12
(a)
Dec-11
(b)
Growth
in 2012
(c=a-b)
Growth (%)
in 2012
(d=c/b)
Term Deposit 2,201 1,683 518 31%
Bank Borrowing 141 211 (70) -33%
BB Refnance 254 168 86 51%
Bond & Others 42 61 (19) -31%
Total Borrowing 2,638 2,123 515 24%
Cost of Funds (COF)
In 2012, the economy, after having passed through
a period when major domestic and external sector
indicators were under signifcant pressure, appeared
to have stabilized. Strong remittance infow, declining
fuel and food grain prices in international market,
stagnant import payment growth and healthy foreign
aids improved macro-economic condition. The external
balance moved to a comfort zone. However, central
banks continued straining monetary policy to check
infation kept liquidity in marginal line and interest
rate in the banking channel was sticky to downward
movement. During the year most of the Banks and
NBFIs operating proft slumped compared to the same
of previous year partly due to rising cost of funds. Being
a NBFI, despite assuming inherent shortcomings of not
ofering current and savings accounts to clients and
not having the mandate of taking term deposits for
less than six months, IDLC performed well in managing
its cost of funds (COF). There are a number of policy
measures that ALCO adopted throughout the year to
manage the soaring cost of funds in tolerable limits.
As the frst step of the underlying key measures, focus
was put on mobilizing funds directly from the savers
to cut intermediary costs. IDLC fortifed its deposit
base with a year-on year deposit growth of 31% and
fourished it with BDT 518 cr. incremental deposit at
relatively lower price, compared to the cost of term
loans from commercial banks.
Secondly, contribution of term loan from commercial
banks was curtailed by 33% (year-on-year) to subdue
the impact of the costliest fund in funding basket. In
the rising interest rate regime, IDLC also focused on
taking the interest rate heat more on shorter term funds
rather than the longer terms and maintained long term
borrowing costs as steady as possible to ensure interest
rate adversity afects IDLC for possibly shorter tenor.
And fnally, all-out eforts were made to draw funds from
the cheapest available funding source - windows of
Bangladesh Banks refnance schemes. During 2012, IDLC
enhanced its BB refnance funding basket by 86 cr.; 51%
year-on-year growth which helped to save signifcant
fnancial expense.
The table below summarizes the refnancing received
from Bangladesh Bank in 2012 under various schemes:
Schemes
2012
(Amount in Cr.)
SME Refnance Scheme 70.65
BB Women Entrepreneur Fund 28.61
Agro Based Fund 20.00
Total 119.26
Asset Liability Management
From the very inception of a bank/fnancial institution,
its balance sheet movements entail various risks. Among
them, liquidity risks and interest rate risks are major two
risks, which require a system in place to detect them
beforehand and consequently ensure sustainability
of the organization in the long run. IDLC has an
approved Asset Liability Management (ALM) Policy,
key responsibility of which lies on the Asset liability
Committee (ALCO) comprised of senior management of
the organization. ALCO holds responsibilities of:
Ensuring a systematic management process for
tracking the Balance Sheet risks in a timely manner.
OUR GOVERNANCE
Annual Report 2012
40
Proactively review and manage potential liquidity
risks and interest rate risks which may arise from
market movements, regulatory changes and/or
changes in economic/political environment.
Ensuring compliance with the regulations of
Bangladesh Bank in respect of statutory obligations
involved within the parameters of Balance Sheet
Risks.
Review and set deposit-pricing and asset-pricing
strategy of IDLC. Determine deposits and assets
growth in the right bucket for better Asset Liability
Management (ALM) of IDLC.
IDLC possesses a robust ALM software and dedicated
ALM desk to generate necessary MIS to ALCO. Led by
the Head of Treasury, ALM support desk tracks, analyzes
and reports Balance Sheet movements of IDLC. In
addition, it also monitors the economic outlook and
market movements in which the bank/FI operates. The
desk provides input to the ALCO who hold the fnal
responsibility for managing the assets and liabilities.
Treasury arranges ALCO meeting in every month and
sometimes invites resource persons in the meeting to
enrich the decision making process with their valuable
inputs. ALCO also sit in special meeting on need basis.
Head of Treasury, the organizer of ALCO meeting,
prepares the ALCO paper with the help of ALM support
desk and present it to the ALCO members. After each
ALCO meeting, minutes are prepared based on the
decisions taken in the meeting. Minutes, approved by
the ALCO Chairman, is circulated to all ALCO members
immediately. In the minutes, the responsibilities for
implementing the decisions taken in the ALCO meeting
are assigned specifcally. In every ALCO meeting
implementation status of last ALCO meeting minutes is
reviewed.
Future Outlook
Bangladesh economy had passed through a dif cult
period in 2012 particularly in 1st half, from the
perspective of macroeconomic management. The
cautious fscal and monetary policy adjustments
adopted by the government in the course of 2012
had contributed to the restoration of macroeconomic
stability to some extent. In 2013, we expect Govt.
and Bangladesh Bank will maintain similar cautious
approach. The signals emanating from the last few
months indicate that liquidity and interest rate
scenario of banking channel will largely depend
on Governments bank borrowing target as well as
Bangladesh Banks stance on money supply and
infation control. Nonetheless, performance of the
economy in 2013 will critically hinge on how the
political challenges facing Bangladesh at the moment
are addressed in the coming months. Any prolonged
uncertainty in this context will have serious implications
for the performance of the banking industry and the
economy.
Under these predicted constraints, we are planning to
greatly impel our deposit drive, channel funds from
diversifed sources and enhance our participation in
BB refnancing schemes to keep our liquidity position
comfortable at an optimum cost.
ALM INFORMATION FLOW CHART
OUR GOVERNANCE
Annual Report 2012
OUR TREASURY
41
LETTER OF TRANSMITAL
Annual Report 2012
Section Name.... Section Name....
Good Governance
42 STATEMENT ON CORPORATE GOVERNANCE
Statement on Corporate Governance
Corporate Governance is a governance strategy for
the companies to ensure a framework of control for
its administrative and management practices. This
is done through a collection of procedures that are
aligned with recognized standards and that respond to
the interests of shareholders and other stakeholders.
It ensures fairness, transparency and accountability
in the corporate sector and safeguards the interest of
all stakeholders, especially the minority shareholders.
Empirical research also suggests that corporations that
adhere to good governance practices tend to attract a
better bottom line.
IDLC highlights six important areas which revolve
around the efective corporate governance strategy as
shown in the diagram. IDLCs Corporate Governance
model is strictly aligned with the companies well-
defned vision, mission, goals, and objectives.
The Board of Directors is responsible for proper
governance which includes setting out Companys
strategic aims, providing the necessary leadership to
implement such aims, supervising the management of
the business and reporting to the shareholders on their
stewardships.
IDLC is committed to continually reviewing all corporate
governance policies and practices to ensure the
ongoing transparency of the companys practices and
the delivery of high standards and quality information
to stakeholders.
The maintenance of efective corporate governance
remains a key priority of the Board of IDLC
Finance Limited. To exercise clarity about directors
responsibilities towards the shareholders, corporate
governance must be dynamic and remain focused on
the business objectives of the Company and create a
culture of openness and accountability. Keeping this
in mind, clear structure and accountabilities supported
by well understood policies and procedures to guide
the activities of the Companys management have been
instituted.
IDLC considers that its corporate governance practices
fairly comply with almost all the aspects of the
Notifcation No. SEC/CMMRRCD/2006-158/Admin/44
dated August 07, 2012 issued by the Bangladesh
Securities and Exchange Commission (BSEC) and all
aspects of Bangladesh Banks DFIM Circular No. 7
dated September 25, 2007. In addition, to establishing
high standards of corporate governance, IDLC also
considers best governance practices in its activities.
The independent role of Board of Directors, separate
and independent role of Chairman and Chief Executive
Of cer, distinct role of the Company Secretary, Chief
Financial Of cer and Chief Compliance Of cer and
diferent Board committees allow IDLC to achieve
excellence in best corporate governance practices.
As a listed Company, IDLC Finance Limited must comply
with the BSEC Listing Rules, which require the Company
to provide a statement in the Annual Report disclosing
the extent to which the Company has complied with
IDLC is committed to continually reviewing all corporate governance policies and
practices to ensure the ongoing transparency of the companys practices and the
delivery of high standards and quality information to stakeholders...
OUR GOVERNANCE
Annual Report 2012
43 STATEMENT ON CORPORATE GOVERNANCE
the BSEC Corporate Governance circulars. The status
of compliance shall be certifed by the practicing
Professional Accountant/Secretary. Tables summarizing
the IDLCs compliances are provided at Annexure III &
Annexure IV of the Directors Report. We also enclose
a certifcate on compliance of Corporate Governance
guideline certifed by practicing Professional
Accountants at page no. 114.
Board of Directors
Composition
The Board of IDLC considers that its membership
should comprise of directors with an appropriate mix
of skills, experience and personal attributes that allow
the directors, individually and the Board, collectively,
to discharge their responsibilities and duties, under the
law, ef ciently and efectively, understand the business
of the Company and assess the performance of the
management.

The composition of the Board embraces diversity.
The Directors have a range of local and international
experience and expertise, and specialized skills to assist
with decision making and leading the company for the
beneft of shareholders.
The Board of IDLC comprises of eleven (11) non-
executive directors including two (2) independent
directors and one executive director who is the CEO &
Managing Director, who possess a wide range of skills
and experience over a range of professions, businesses
and services. All of the non-executive directors are
nominated by their respective institutions except for the
Independent Directors. Each of IDLCs directors brings
in independent judgment and considerable knowledge
to perform their roles efectively. The Board of Directors
ensures that the activities of the Company are always
conducted with adherence to strict and highest possible
ethical standards and in the best interests of the
stakeholders.
Selection and Appointment of New Directors
In relation to the selection and appointment of new
directors, the existing Board of Directors has the
following duties and responsibilities:
Regularly review the size and composition of the
Board and the mix of expertise, skills, experience
and perspectives that may be desirable to permit
the Board to execute its functions;
Identify any competencies not adequately
represented and agree the process necessary to
be assured that a candidate nominated by the
shareholders with those competencies is selected;
The directors are appointed by the shareholders in the
Annual General Meeting (AGM). Casual vacancies, if
any, are flled up by the Board in accordance with the
stipulations of the Companies Act, 1994 and Articles of
the Company.
The CEO & Managing Director is appointed by the Board
subject to the consent of shareholders in the Annual
General Meeting (AGM) and approval of the Central
Bank.
Any change in the members of the Board requires
intimation to the Bangladesh Bank, all scheduled banks
and Financial Institutions (FIs), Bangladesh Securities
and Exchange Commission (BSEC) and stock exchanges.
Retirement and Re-election of Directors
As per the Articles of Association of the Company,
one-third of the directors are required to retire from the
Board in every year, who have been longest in of ce
since their last election. A retiring director shall be
eligible for re-election.
OUR GOVERNANCE
Annual Report 2012
44
Independent Director and af rmation of
independence
As per the Circular No. SEC/CMMRRCD/2006-158/
Admin/44 dated August 07, 2012, issued by the BSEC,
the elected directors of the Board of IDLC nominate
independent directors on the Board so that the Board,
as a group, includes core competencies considered
relevant in the context of the company.
The Board of IDLC Finance Limited af rms that the
independent directors appointed by the Board are in
compliance with the clauses of Corporate Governance
guideline issued by the BSEC on Independent Director.
Qualifcation of Board members
The Board of Directors of IDLC Finance Limited
consists of members with a variety of knowledge and
experience, in fnance, economy, management, business
administration, marketing and law. This is to ensure
that together, they can formulate a right policy for the
development of business while having specialized skills,
ability to see things in a bigger perspective and enough
independence to audit the management in a balancing
manner.
One of the directors in the Board is a Chartered
Accountant with more than thirty years of experiences
who normally provides guidance in the matters
applicable to accounting and auditing related issues to
ensure compliance and reliable fnancial reporting.
Respective qualifcation of directors is appended in
directors profle at page no. 18
Role and Responsibilities of the Board
The Board is committed to the Company to achieve
superior fnancial performance and long term
prosperity, while meeting stakeholders expectations
of sound corporate governance practices. The Board
determines the corporate governance arrangements
for the Company. As with all its business activities, the
Board is proactive in respect of corporate 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 duly complies with the guidelines issued
by Bangladesh Bank regarding the responsibility and
accountability of the Board , its Chairman and Chief
Executive/Managing Director, vide DFIM Circular No. 7
dated September 25, 2007.
The Board of Directors is in full control of the Companys
afairs and is also fully accountable to the shareholders.
They frmly 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
afairs of the Company. The Board also formulates
the strategic objectives and policy framework for the
Company. In discharging the above responsibilities, the
Board caries out, inter alia, the following functions as per
the charter of the Board and Bangladesh Banks DFIM
Circular No. 7, dated September 25, 2007:
Stakeholders Responsibilities Reserved to the Board
Shareholders
Approval of business strategy and vision in line with eforts to drive shareholder value creation;
Approval of business plans, assuring that suf cient resources are available to implement
strategy and monitoring of the implementation of strategy;
Approval and monitoring of major investments or divestitures and strategic commitments;
Determination of capital structure and dividend policy;
Approval and monitoring of fnancial reporting;
Oversight of risk management, internal control and compliance systems as per Bangladesh
Banks Core Risk Guideline;
Recommendation for appointment or removal of external auditors and determination of the
remuneration and terms of appointment of the auditors;
Oversight of shareholder reporting and communications;
STATEMENT ON CORPORATE GOVERNANCE
OUR GOVERNANCE
Annual Report 2012
45
Stakeholders Responsibilities Reserved to the Board
Approval of annual budgets including major capital expenditure proposals;
Regular review of fnancial performance and overdue situation;
Monitoring the adequacy , appropriateness and operation of internal control;
Ensure that technology and information systems used in the organization are suf cient to
operate the organization efectively and maintain competitiveness;
Customers
Benchmarking the delivery of value to customers, clients and partners;
Reinforcement of culture, core values and employer of choice;
Employees
Review and approval of CEO and Executive Management Teams contractual arrangements,
remuneration and benefts;
Oversight of succession planning for the CEO, Executive Management Team and such other
executives as the Board may determine;
Community
Oversight of the management of social, economic and environmental concerns consistent
with the delivery of sustainable outcomes for stakeholders and achievement of the Companys
Incident & Injury Free vision;
Reinforcement of reputation, brand and community relations;
Review of the size and composition of the Board ;
Directors
Directors nomination, selection, removal, succession planning and remuneration; and
Review of Board performance.
The Chairman of the Board is elected to the of ce of
Chairman by the directors. The Board considers that the
Chairman is independent.
He provides leadership to the companys Board and
executives. The chair of the Board ensures that the
companys duties to shareholders are being fulflled
by acting as a link between the Board and upper
management.
Role and responsibilities of the Chairman is defned
by the Board
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 efectively and discharges
its responsibilities as directors of the Company.
The role and responsibilities of the chairman of the
Board is defned and set by the Board.
Role of the Chairman

The Chairmans primary role is to ensure that the Board
is efective in its tasks of setting and implementing
the Companys direction and strategy. The Chairman is
appointed by the Board.
The main features of the role of the Chairman of IDLC is
as follows:
providing leadership to the Board;
taking responsibility for the Boards composition
and development;
ensuring proper information for the Board;
planning and conducting Board meetings
efectively;
getting all directors involved in the Boards work;
ensuring the Boards focuses on its key tasks;
engaging the Board in assessing and improving
its performance;
overseeing the induction and development of
directors;
supporting the CEO & Managing Director;
OUR GOVERNANCE
Annual Report 2012
46
Responsibilities of the Chairman:
The Chairman of the Board shall be responsible for
the management, the development and the efective
performance of the Board of Directors, and provides
leadership to the Board for all aspects of the Boards
work. The Chairman is responsible for leadership of the
Board. In particular, he will:
Ensure efective operation of the Board and
its committees in conformity with the highest
standards of corporate governance;
Ensure efective communication with
shareholders, host governments and other
relevant constituencies and that the views of
these groups are understood by the Board ;
Set the agenda, style and tone of Board
discussions to promote constructive debate and
efective decision-making;
Ensure that all Board committees are properly
established, composed and operated;
Support the CEO & Managing Director in the
development of strategy and, more broadly, to
support and advise the CEO & Managing Director;
Ensure an efective relationship among
directors, acting as the principal conduit for
communications and issues relating to business
strategy, planned acquisitions and corporate
governance;
Establish a harmonious and open relationship
with the CEO & Managing Director;
Ensure that Board committees are properly
structured and all corporate governance matters
are fully addressed; and
Encourage active engagement by all the
members of the Board .
Chairman of the Board & CEO of the Company are
diferent individuals
The Chairman of the Board is not the Chief Executive
of the Company. The Chairman and the CEO &
Managing Director are diferent individuals. The Role
of the Chairman and the CEO & Managing Director are
independent and separate.
Role of the CEO & Managing Director
The CEO & Managing Director is responsible for leading
the development and execution of the Companys long
term strategy with a view to creating shareholders
value. The CEOs leadership role also entails being
ultimately responsible for all day-to-day management
decisions and for implementing the Companys long
and short term plans.
The CEO acts as a direct liaison between the Board
and management of the Company and communicates
to the Board on behalf of management. The CEO
also communicates on behalf of the Company to
shareholders, employees, Government authorities, other
stakeholders and the public.
Role of the CEO & Managing Director:
As Leader
Advises the Board;
Advocates / promotes organization; and
Supports motivation of employees in
organization.
As Visionary / Information Bearer
Ensures staf and Board have suf cient and up-
to-date information;
Looks to the future for change opportunities;
Interfaces between Board and employees;
Interfaces between organization and
community;
As Decision Maker
Formulates policies and planning
recommendations to the Board;
Decides or guides courses of action in
operations.
As Manager
Oversees operations of organization;
Implements plans;
Manages human resources of organization;
Manages fnancial and physical resources;
Responsibilities of the CEO & Managing Director:
The CEO & Managing Director is responsible for
leadership of the business and managing it within the
authorities delegated by the Board. In particular, he will:
Develop strategy proposals for recommendation
to the Board and ensure that agreed strategies
are refected in the business;
Develop annual plans, consistent with agreed
strategies, for presentation to the Board for
support;
OUR GOVERNANCE
Annual Report 2012
47
Plan human resourcing to ensure that the
Company has the capabilities and resources
required to achieve its plans;
Develop an organisational structure and
establish processes and systems to ensure the
ef cient organisation of resources;
Be responsible to the Board for the performance
of the business consistent with agreed plans,
strategies and policies;
Lead the executive team, including the
development of performance contracts and
appraisals;
Ensure that fnancial results, business strategies
and, where appropriate, targets and milestones
are communicated to the investment
community;
Develop and promote efective communication
with shareholders and other relevant
constituencies;
Ensure that business performance is consistent
with the Business Principles;
Ensure that robust management succession and
management development plans are in place;
Develop processes and structures to ensure
that capital investment proposals are reviewed
thoroughly, that associated risks are identifed
and appropriate steps taken to manage the risks;
Develop and maintain an efective framework
of internal controls over risk in relation to all
business activities including the Groups trading
activities;
Ensure that the fow of information to the Board
is accurate, timely and clear;
Appraisal of the CEO & Managing Director
At the beginning of each year the Board discusses with
the CEO & Managing Director and sets fnancial and
non fnancial goals. The annual fnancial budget and
job objectives are discussed, reviewed and fnalized by
the Board at the start of the fnancial year. The business
and fnancial targets are evaluated in each quarter with
actual achievements by the Board. The non fnancial
achievements are also reviewed by the Board in each
quarter. Moreover, a yearly assessment and evaluation of
the achievements of pre agreed targets are made at the
close of the year along with the deviations, and reasons
of deviations.
Code of Conduct for the Board Members
The Board of Directors of IDLC Finance Limited is
committed to the highest standards of conduct in
their relationships with IDLC employees, customers,
members, shareholders, regulators and the public. This
means conducting our business in accordance with
all applicable laws and regulations, and it also means
commitment to the spirit of the law. Our actions should
refect IDLCs values, demonstrate ethical leadership,
and promote a work environment that upholds IDLCs
reputation for integrity, ethical conduct and trust.
This Code is intended to provide a statement of the
fundamental principles applicable to our directors.
Directors are encouraged to bring questions about
particular circumstances that may involve one or more
of the provisions of this Code to the Chairman of the
Board .
Scope of the Code of Conduct
(a) A member must observe the Board s code of
conduct whenever he / she -
conducts the business of the Board ;
acts as a representative of the Board .
(b) The Boards code of conduct shall not have efect
in relation to the activities of a Board member
undertaken other than in an of cial capacity, except
and in so far, as otherwise indicated.
(c) Where a Board member acts as a representative of
the Board at the meeting of another public body
or committee, he/she must, when acting in that
capacity, comply with the Board s code of conduct,
except and in so far as it conficts with any other
legal obligations to which he / she may be subject.
General Obligation
The Code of Conduct for Board Members of the
Company includes:
A. Prudent conduct and behavior
Each Board Member should seek to use due care in the
performance of his/her duties, be loyal to the Company,
act in good faith and in a manner such Board Member
reasonably believe to be not opposed to the best
interests of the Company. A Board member shall seek
to:-
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i. make reasonable eforts to attend Board and
Committee meetings;
ii. dedicate time and attention to the Company;
iii. seek to comply with all applicable laws,
regulations, confdentiality obligations and
corporate policies of the Company;
iv. act in the best interest of, and fulfll their
fduciary obligations to, companys shareholders;
and
v. use due care and diligence in performing their
duties of of ce and in exercising their powers
attached to that of ce.
B. Business opportunities
In carrying out their duties and responsibilities, Board
Members shall avoid:
(i) appropriating corporate business opportunities
for themselves that are discovered through the
use of Company property or information or their
position as Board Member;
(ii) using Company property or information, or their
position as Board Member, for personal gain;
and
(iii) competing with the Company.
C. Confict of interest
Each Board member shall endeavor to avoid having his
or her private interests interfere with:
(i) the interests of the Company or
(ii) his or her ability to perform his or her duties and
responsibilities objectively and efectively.
Board members shall avoid receiving, or permitting
members of their immediate family to receive, improper
personal benefts from the Company, including loans
from or guarantees of obligations by the Company.
Board member shall make a full disclosure to the entire
Board of any transaction or relationship that such a
Board Member reasonably expects could give rise to an
actual confict of interest with the Company and seek
the Board s authorization to pursue such transactions or
relationships.
D. Company property
member shall endeavor to ensure that management is
causing the Companys assets, proprietary information
and resources to be used by the Company and its
employees only for legitimate business purposes of the
Company.
E. Confdential information
Board members shall maintain the confdentiality of
information entrusted to them in carrying out their
duties and responsibilities, except where disclosure is
approved by the Company or legally mandated or if
such information is in the public domain.
The Companys confdential and proprietary information
shall not be inappropriately disclosed or used for the
personal gain or advantage of any Board Member other
than the Company. These obligations apply not only
during a Board Members term, but thereafter as well.
F. Fair dealing
members shall endeavor to deal fairly, and should
promote fair dealing by the Company, its employees
and agents, with customers, suppliers and employees.
G. Compliance with laws and regulations
members shall comply, and endeavor to ensure that the
management is causing the Company to comply, with
applicable laws, rules and regulations.
In addition, if any Board member becomes aware of any
information that he or she believes constitutes evidence
of a material violation of any securities or other laws,
rules or regulations applicable to the Company or
the operation of its business, by the Company, any
employee or another Board member, then such Board
member should bring such information to the attention
of CEO & Managing Director of the Company.
H. Insider trading
Board members shall not do insider trading with respect
to the purchase and sale of the Companys securities.
Board members shall not buy or sell securities while in
possession of material non-public information about
the issuer of that security, whether the issuer is IDLC or
another company. Board members shall not also pass
such information on to someone who may buy or sell
securities.
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Code of Conduct for Board member sets forth guidelines
for conduct for the Board members. The Board Members
af rm compliance with the Code on annual basis.
Appraisal of Boards performance
Both new and existing Directors are provided with the
Code of Conduct for the Board members on general
aspects of the directorship and industry specifc matters.
Moreover, Board is immediately informed of any new
rules, regulations and/or changes in existing regulations.
Board is also always kept updated on any development
and changes in the business environment, risk and
industry outlook to assist them to carry out their duties
as Director.
Evaluation of the performance of the Board is made
by analyzing the performance of the projects and
proposals approved by the Board. A quarterly review of
classifed and non-performing loans are always made in
the Board to fnd out what went wrong and why.
Board Meeting
Holding of the Board meeting
The meetings of the Board of Directors of IDLC are
normally held at the Registered Corporate Head Of ce
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
ef ciently. The members of the Board are also free
to recommend inclusion of any matter in the agenda
for discussions. The Company Secretary and the Chief
Financial Of cer 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 signifcant matters to the
Board and it being able to seek further information on
any issue relating to performance, strategy, outlook, etc.
Number of Board meeting held in 2012
The number of meetings of the Board and the
Committees of the Board held during the accounting
year, and the attendance of directors at those meetings
and their respective remuneration, is disclosed in the
Annexure-II of the Directors Report on page No. 113.
The number of directors required to constitute a
quorum is six (6), out of the eleven directors. During
2012, total eleven (11) Board meetings were held.
Directors Remuneration
Directors are not entitled to any remuneration
other than attending meeting of the Board and its
Committee. As per DFIM Circular No. 03, dated February
24, 2010, directors are entitled to the remuneration to
the extent of BDT 5,000 for attending each meeting.
The detail of the attendance along with the amount of
remuneration of directors in meeting of the Board and
its committee is enclosed in Annexure-II of Directors
report. The amount of remuneration paid to directors
is also disclosed in note no. of the audited fnancial
statement.
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 the Chairman of the
Board determines otherwise. It is expected that a
director will consult with the Chairman of the Board,
Managing Director or Company Secretary before
obtaining external advice.
Role of the Company Secretary
Company Secretary of the Company acts as a
mediator between the company, its Board of Directors,
stakeholders, government and regulatory authorities.
He has expertise in corporate laws, capital markets,
security laws and corporate governance. He is the one
who advises Board of Directors on the kind of practices
to be adopted in corporate governance.
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He ensures that best management practices and work
ethics are followed to create wealth creation for the
company. He represents the company for internal and
external stakeholders, co-ordinates the policies of the
company and management function, guides on the
strategic decisions for the betterment and growth of the
company.
In compliance with the Corporate Governance
guideline, the Company Secretary has a defned role and
responsibilities approved by the Board.
Senior Management
Structure
The Companys management structure comprises the
CEO & Managing Director and the Management Team
(ManCom). The ManCom is responsible for developing
organizational and business strategy and sponsoring
innovation and development of best practices across
the company. The ManCom is also responsible for
organizational efectiveness and the development of
IDLCs values and culture. The ManCom is responsible for
managing IDLCs performance and key business issues
in line with the companys long term strategy and for
talent and performance management. The ManCom is
chaired by the CEO & Managing Director and the team
meets face to face on a regular basis.
Performance Review
The CEO is responsible for setting fnancial targets as
well as operational and management goals for the
members of the ManCom. Both short term and long
term goals form part of the performance management
of all senior executives. Long term goals are directly
linked to the vision of the company. Short term goals are
generally directly linked to objectives of the company.
The CEO and Evaluation Committee conduct a detailed
review of the performance of senior executives against
these goals on an annual basis at the end of each year.
Remuneration of the senior executives
Remuneration of all senior executives, are based on
performance measured against fnancial and individual
targets.
Board Committees Membership
The Board has established two permanent
Board Committees to assist, advice and make
recommendations to the Board on matters falling
within their respective responsibilities as per BSEC and
Bangladesh Bank guideline.
Each Committee is governed by a formal charter
approved by the Board setting out its objectives,
responsibilities, structure and operation. The
membership of the Board Committees as at the date
of authorization of this Annual Report is set out in the
table below:
Name of Director
Member of
Executive
Committee
Audit
Committee
Anwarul Huq - Member
Rubel Aziz Chairman Member
Md. Habibur Rahman Mollah - Member
Aziz Al Kaiser - -
Hossain Mehmood - -
Meherun Haque - -
K. Mahmood Sattar Member -
Rezaul Karim Member Member
M. Amanullah Member -
Farooq Sobhan - Chairman
Syed Abu Naser Bukhtear Ahmed - -
Selim R. F. Hussain Member -
Executive Committee
A fve (5) member Executive Committee headed by a
director is responsible for strategic and operational
plans of the business. The matter related to ordinary
business operations of the Company and the matters
that the Board of Directors, from time to time authorize,
are vested in this Committee in accordance with
the Statement of General and Operational Policies
established and made by the Board of Directors. This
Committee assists IDLC in taking prompt decisions and
reacts swiftly to changes in the market-place as they
occur. The Rules of the Executive Committee is framed
by the Board.
During the year under review, nine (9) Executive
Committee meetings were held. The Company Secretary
acts as the secretary of the Executive Committee.
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Audit Committee
The IDLC Audit Committee is a sub-committee of the
Board formed in compliance with requirements of DFIM
Circular No. 13, dated October 26, 2011 of Bangladesh
Bank and relevant BSEC notifcation(s) and international
best practices on Corporate Governance.
Objectives of the Audit Committee
The Audit Committee shall assist the Board of Directors
to ensure that the fnancial statements refect true and
fair view of the state of afairs of the company. The
committee will also ensure a good monitoring system
within the business.
The principal functions of the Audit Committee are to
exercise oversight over the companys risk management,
fnancial reporting and regulatory compliance functions.
Composition of Audit Committee including
In compliance with the DFIM Circular No.13, dated
October 26, 2011 of Bangladesh Bank and Corporate
Governance guideline of BSEC, the committee consists
of fve (5) non-executive members of the Board
including an Independent Director. The quorum of
the meeting shall not be flled unless and until the
Independent Director will attend in the meeting. The
Company Secretary acts as the secretary of the Audit
Committee.
Audit Committee Terms of Reference
This role is further expounded on and clarifed in the
Terms of Reference (ToR) of the Audit Committee which
was revised in light of recent directives contained in
DFIM Circular No.13 dated October 26, 2011 issued by
Bangladesh Bank. According to the revised ToR of the
Audit Committee, its principal duties and responsibilities
are as follows:
In respect of internal control
1. Evaluating whether the management:
a. Has an appropriate internal control and
compliance culture with regard to risk
management of the company;
b. Has clearly defned the duties and
responsibilities of of cials;
c. Has full control over the operations of the
company.
2. Reviewing the appropriateness of Management
Information System (MIS) including information
technology system and its use.

3. Reviewing whether management is complying with
recommendations made by the internal and external
auditors.
4. Reviewing existing risk management procedures to
ensure that the processes are efectively run in the
company.
5. Reviewing all fraud, forgery and internal control
weakness discovered by internal, external or
regulatory auditors and thereafter keeping the
Board of directors informed of all those discoveries
and subsequent corrective measures.
In respect of fnancial statements
1. Reviewing whether the fnancial statements were
prepared in compliance with all directives and
guidelines prescribed by the Bangladesh Bank and
other applicable standards.
2. Engaging in discussions with external auditors and
management prior to the fnalization of fnancial
statement.
3. Attending and answering questions related to the
accounts and audit at the AGM.
In respect of internal audit
1. Reviewing the activities and organizational structure
of internal audit and ensuring that there is no barrier
or limitation to the performance of an independent
internal audit.
2. Assessing the ef ciency and efectiveness of internal
audit.
3. Assessing whether management is appropriately
considering compliance of recommendations
made by the internal auditors with regard to the
observations identifed by them.
4. Placing recommendations before the Board of
directors in case of change of accounting policies.
In respect of external audit
1. Appraising the audit procedures and reviewing the
management letter submitted by external auditors.
2. Assessing whether management has appropriately
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considered the observations and recommendations
made by the external auditors.
3. Placing recommendations to the Board of directors
regarding appointment of external auditors.
In respect of compliance to existing regulations
Reviewing whether the rules and regulations set
by regulatory authorities (central bank and others
regulatory bodies) as well as internal policies and
guidelines approved by the Board of directors are being
complied with.
Miscellaneous
1. Placing quarterly reports before the Board of
directors on rectifcation/correction status of errors,
fraud, forgery and other irregularities identifed by
internal auditors, external auditors and Bangladesh
Bank inspection team.
2. Performing all other supervisory activities as
assigned by the Board as well as evaluating its own
ef ciency on a regular basis.
Chairman of the Audit Committee and qualifcations
of the members
The Audit Committee is chaired by an Independent
Director. All the members of the committee are fnancially
literate as defned by the revised Corporate Governance
guideline. Qualifcation of the members of the committee
is described in their brief profle at page No. 18.
The Audit Committee and Internal Control &
Compliance
Internal Control & Compliance (ICC) Department is the
department within IDLC that is tasked with reviewing
the Companys system of internal controls, including the
conduct of regular audits of all operational units. ICC is
operationally independent in that its members are not
involved in the Companys operational activities and in
that the Head of ICC (HoICC), in addition to his direct
reporting line to the CEO & MD, also has access to the
Audit Committee.
The Audit Committee is responsible for approving
the annual audit plan of ICC and reviewing the plans
subsequent implementation. Internal audit reports or
summaries thereof prepared by ICC are reviewed on a
regular basis by the committee.
Access of HoICC to the Audit Committee
The Head of Internal Control & Compliance has direct
access to the Audit Committee which in turn is directly
accountable to the Board.
Meetings of the Audit Committee
As per its Terms of Reference, the Audit Committee
is required to hold at least four (4) meetings in a
year. During the year ended 31 December 2012, the
committee met this stipulation. The detail of meeting
held and members attendance in the meeting is
disclosed in Annexure II of the Directors Report.
Key issues discussed and/or resolved at the meetings of
the Audit Committee included the following:
Discussed with external auditor and management
prior to the fnalization of Financial Statements of
IDLC Finance Limited for the year ended December
31, 2011as per Bangladesh Bank circular no. 13
dated October 26, 2011.
Reviewed the draft audited Financial Statements of
31, 2011.
Reviewed the report of the Audit Committee for
incorporation in the Annual Report 2011;
Recommended for appointing external auditor for
the year 2012;
Reviewed the Bangladesh Bank Inspection Report
on corporate head of ce of IDLC as of June 30, 2011,
and, Management responses to the report;
Reviewed the management letter of the annual
audit of Financial Statements of IDLC for the year
Reviewed the internal audit reports;
Reviewed the unaudited Financial Statements of
IDLC Finance Limited for the quarter and half-year
ended for the year 2012;
Reviewed the guidance notes on the prevention of
money laundering and terrorist fnancing;
Reviewed action plan to comply with the revised
corporate governance guidelines issued by
Bangladesh Securities and Exchange Commission;
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Starting from 26 October 2011, all minutes of the Audit
Committee meeting are required to be submitted to
Bangladesh Bank in accordance with the directives of
DFIM Circular No. 13. Accordingly, all minutes of the
meeting of the Audit Committee are being submitted to
Bangladesh Bank.
Quorum of the Audit Committee meeting
The number of directors required to constitute a
quorum is two (2), of them one shall be Independent
Director. The Company Secretary shall act as the
secretary of the committee.
Reporting of the Audit Committee
The Audit Committee reports directly to the Board of
Directors and under certain circumstances can also
report to the BSEC.
Immediate reporting to the Board of Directors
Audit Committee shall immediately report to the Board
of Directors in the following cases:
On confict of interest;
Suspected and presumed fraud or irregularity or
material defect in the internal control system;
Suspected infringement of laws, including securities
related laws, rules and regulations; and
Any other matter which should be disclosed to the
Board of Directors immediately.
No such issues arose at IDLC during the year ended
December 31, 2012.
Immediate reporting to the Securities & Exchange
Commission
If the Audit Committee has reported to the Board of
Directors about anything which has material impact on
the fnancial condition and results of operation of and
where the Audit Committee fnds that such rectifcation
has been unreasonably ignored, the Audit Committee
shall report such fnding to the SEC, upon reporting of
such matters to the Board of Directors for three times or
completion of a period of 9 (nine) months from the date
of frst reporting to the Board of Directors, whichever is
earlier.
No such circumstances arose during the year ended
December 31, 2012.
Internal Control
IDLC has adopted the defnition of internal
control provided by the Committee of Sponsoring
Organisations of the Treadway Commission (COSO) in its
Internal Control Integrated Framework. Accordingly,
IDLC defnes internal control as a process, afected by its
board of directors, management and other personnel,
which designed to provide reasonable assurance
regarding the achievement of objectives relating to the
efectiveness and ef ciency of operations, reliability of
both external and internal fnancial and non-fnancial
reporting, and compliance with applicable laws and
regulations. The control system applies across the
IDLC group, to all divisions and departments of IDLCs
operations.
The internal control system of the Company consists of
fve interrelated components:
The control environment
The control environment refers to the attitudes,
awareness, and actions of those in governance and
management role with regard to the companys
internal control and its importance in the entity.
Elements in IDLCs control environment include:
active participation by those charged with
governance as evidenced through regular
meetings of its Board of Directors and Audit
Committee;
the communication and fostering of an
environment that consistently requires integrity
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and ethical behaviour, as evidenced by regular
communication and confrmation of its Code
of Conduct and zero tolerance for illegal or
unethical behaviour;
a formal well-defned organizational structure,
setting out key areas of authority and
responsibility and appropriate reporting lines,
that is relevant to the nature and size of the
Companys business;
human resource policies that demonstrate the
Companys commitment towards recruiting
employees who meet established standards of
competence and ethical behaviour.
Risk assessment
Risk assessment refers to the process(es) which
the company identifes and assesses risks to the
achievement of objectives. Changing external and
internal environments mean that risk assessment
is a dynamic process and must occur at all levels of
the organisation structure ranging from branch and
department level reviews of portfolios, functions
and operations to MANCO and ALCO meetings at
the very top level of management.
Control activities
Control activities are the policies and procedures
that help ensure that management directives are
carried out. Control activities have various objectives
and are applied throughout the company at all
levels and in all functions. These include activities
such as authorization, reviews, reconciliations and
verifcations.
Information and communication
The information and communication component
facilitates the functioning of the other components
by providing information that is necessary for
the attainment of Company objectives and by
establishing a continuous process for collecting,
sharing and disseminating necessary information
from both within and outside the Company. To that
end, the Company has established information
systems that deal with internally generated data
as well as external events, activities and conditions
relevant to business decision making to produce
operational, functional and compliance-related
information. Introduction of the companys new
Flexcube software has further enhanced the
capabilities of the Companys information systems.
In a more general sense, IDLC culture encourages
sharing of information and opinions up and down
the management hierarchy and across diferent
businesses, functions and departments.
Monitoring
Monitoring involves ensuring that controls
are operating as intended and that they are
appropriately modifed in response to changing
conditions. At IDLC, this is achieved through a
variety of measures including ongoing monitoring
which occurs in the course of, and as part of, day-
to-day operations as well as separate management
reviews, evaluations and periodic internal audits of
various departments and business functions.
Although the Board of IDLC is primarily responsible
for ensuring that the Company has an adequate
and efective control system in place, ultimately all
employees are accountable for managing internal
controls. Business and operational units, particularly,
department heads are in charge for ensuring that
internal controls are established, properly documented,
and maintained in his/her department. The Internal
Control & Compliance (ICC) department acts as a
second line of defence through the conducts tests on
the ef ciency and efectiveness of the control system
through audit.
Properly designed management structure, clearly
defned responsibilities, delegation of authorities, risk
awareness, establishment of accountability at each
level and system of periodic reporting and performance
monitoring are the key elements of the internal control
framework employed in IDLC.
Identifcation of the risks IDLC is exposed to both
internally and externally
Risk is the element of uncertainty or possibility of loss
that prevail in any business transaction in any place,
in any mode and at any time. Risk is an integral part
of fnancing business. Risk management entails the
adoption of several measures to strengthen the ability
of an organization to cope with the vagaries of the
complex business environment in which it operates.
As a fnancial institution, IDLC is exposed to a number of
risks, major among which are:
Credit Risk
Market Risk
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Liquidity Risk
Operational Risk
A more detailed discussion of these risks and strategies
adopted to manage and mitigate those risk are given in
the Statements of Risk Management at page No. 28 of
the report.
The adequacy of the system of internal controls is
reviewed by the Board of Directors
The Board of Directors of IDLC Group acknowledges its
overall responsibility for maintaining the adequacy and
efectiveness of the Groups system of internal controls.
The Board is of the view that the internal control
framework is designed to manage the Groups risks
within an acceptable risk profle, rather than completely
eliminate the risk of failure to achieve the policies,
goals and objectives of the Group. The Board therefore
believes that it can provide only reasonable, rather than
absolute, assurance regarding efectiveness against
material misstatement of management and fnancial
information or against fnancial losses and fraud.
Subject to the caveats of reasonable assurance
mentioned above, the Board confrms that it has
reviewed and assessed the Groups system of internal
controls with regard to its adequacy and efectiveness
in providing reasonable assurance regarding the
achievement of objectives relating to the efectiveness
and ef ciency of operations, reliability of both external
and internal fnancial and non-fnancial reporting, and
compliance with applicable laws and regulations.
The Board is of the view that the system of internal
controls in place is sound and adequate to provide
reasonable assurance regarding the objectives
mentioned in the preceding paragraphs.
Management Committees
ManCom
The Management Committee is a group elected among
the management stafs to take responsibility for the
governance and strategic direction of IDLC. The role
of the Management Committee is to oversee IDLC in
accordance with its Constitution under the Financial
Institution Act 1993.
The Committee is responsible for all aspects of the
ongoing operation of IDLC. It delegates day-to-day
operations to the Executive Of cer. An important
feature of good governance is a clear segregation of the
responsibilities and accountability of the Committee
from those of the Executive Of cer.
ManCom is always aware of IDLCs operations, keeps an
eye on the big picture, monitor the strategic plan and
that goals are being met. It needs to be satisfed that
what is happening is in accordance with IDLC policies
and objectives, within the overall budget.
Credit Evaluation Committee (CEC)
The CEC evaluates all projects/proposals of fnancing
activities of the Company from the risk point of view.
Composition
Headed by the CEO & Managing Director, the committee
consists of the following members:
CEO & Managing Director;
Deputy Managing Director & Chief Financial Of cer;
Head of Credit and Collection;
Head of Corporate; and
Head of SME.
Scope of the committee:
CEC holds rights to:
Approve an appraisal report as per proposed
terms and conditions for consideration of
sanctioning authority;
Request for additional information;
Request evidence regarding any information
provided;
Suggest changes in or inclusion of terms and
conditions regarding clients liability with IDLC
Finance Limited or any other fnancial institution
or bank;
Suggest changes in terms and conditions
concerned with repayment; including repayment
schedule, transfer price, late payment interest
rate, true rate and efective rate;
Suggest to change or increase security;
Suggest to change the loan amount;
Suggest increasing equity participation of client;
Suggest providing additional guarantor; and
Decline a fnancial proposal based on overall risk
assessment.
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HR & Compensation Committee of IDLC was formed on
May 24, 2007 to provide a forum for the discussion on
various HR related issues of the Company. The main role
and function of the HR & Compensation Committee is
to assist Human Resources Department in developing
and administering a fair and transparent procedure for
setting policy on the overall human resources strategy
of the Group.
The responsibility of the committee is to ensure the
Company wide equal opportunity and transparency
in terms of suitable recruitment, compensation on the
basis of merit, qualifcation and competence, adequate
training and development facilities, performance
evaluation and promotion based on individual
performance and contribution and other benefts
related issues and having regard to the Companys
operating results and comparable market statistics.
Composition
CEO & Managing Director is the chairman of the
committee and all members of the MANCOM are
members of the committee.
Frequency of holding meeting
Meetings of the HR & Compensation Committee are
in principle called by the Head of Human Resources.
The Committee shall meet as often as required for the
proper functioning of the Committee and to review the
Companys overall human resources strategy and to
make recommendations to the Board /Management for
changes and improvement in this regard.
Attendance
Only Members are entitled to attend the meetings of
the HR & Compensation Committee. However, other
Department Heads may attend the meetings on
invitation by the committee from time to time.
Responsibilities
The responsibilities and functions of the Committee are
as follows:
Review the competitiveness of the Companys
executive compensation programs to ensure:
the attraction and retention of quality staf
the motivation of employees to achieve the
Companys overall business objectives and
the alignment of the interests of key leadership
with the long-term interests of the Companys
shareholders
Review trends in management compensation,
oversee the development of new compensation
plans and, when necessary, approve the revision of
existing plans
Review the performance management system
Approve the salaries, bonus and other compensation
for all employees. The Committee will recommend
appropriate salary, bonus and other compensation
to the Board for approval
Review and approve developmental activities for
employees
Review and make recommendations concerning
long-term incentive compensation plans and
policies
BASEL II Implementation Committee
As per the Capital Adequacy and Market Discipline
guideline of the Bangladesh Bank IDLCs BASEL
Implementation Committee consists of four members.
The BASEL Implementation Committee Charter states
that the committee has the following responsibilities:
Apply the action plan of BASEL II and review
there-of;
Communicate issues related to BASEL II
implementation to the management;
Help carry out Quantitative Impact Study (QIS) (if
necessary);
Capacity building program and training
according to Training Need Assessment (TNA) for
the concerned of cials;
Establish planning and supervisory review as
required by Pillar-II of BASEL II Framework.
The committee reviews strategies on BASEL
Implementation, including:
Review of actions taken in previous BIU meeting;
Economic and market status and outlook;
Credit, market and operational risk related to the
capital adequacy;
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Review of the BASEL implementation status; and
Action taken.
Communications and Relationship with
Shareholders
It is the Companys policy that all external
communications by the Company will:
be factual and subject to internal vetting and
authorization before issue;
not omit material information; and
be timely and expressed in a clear and objective
manner.
IDLC strongly believes that all stakeholders should
have access to complete information on its activities,
performance and product initiatives. The Companys
web site www.idlc.com displays, inter alia, the
annual report, half yearly report, quarterly report,
monthly business review, product oferings, recent
announcements, presentations and events update.
The Company reports to the shareholders, four times a
year, through quarterly, half yearly report and detailed
annual report. Every shareholder has the right to attend
the annual general meeting, where they can meet and
communicate with the directors and express their views
regarding the Companys business, its future prospects
and other matters of interest. The shareholders are
always encouraged to attend the meeting or, if unable
to attend, may appoint proxies.
All disclosures required by the Bangladesh Securities
and Exchange Commission, Listing Regulations of Dhaka
Stock Exchange Limited and Chittagong Stock Exchange
Limited and Bangladesh Bank are made adequately and
promptly. In addition to ensuring timely compliance,
this also enables dissemination of information to all
stakeholders and the public.
Preparation and Presentation of Financial
Statements and Directors Responsibility
The Companies Act 1994 requires the directors to
prepare fnancial statements for each accounting year.
The Board of Directors accepts the responsibility for
preparation of the fnancial statements, maintaining
adequate records for safeguarding the assets of the
Company, preventing and detecting fraud and/or other
irregularities, selecting suitable accounting policies
and apply those policies, consistently, and making
reasonable and prudent judgments and estimates
where necessary.
A separate statement of Directors responsibility for
fnancial reporting is given at page No. 87.
Ethic and compliance
The IDLC group remains committed to upholding the
highest standards of ethics and compliant behavior
by its employees. This commitment to ethical and
compliant behavior is refected in the companys Code
of Conduct which covers, among other issues, the
following areas:
Their relationships with and responsibilities to IDLC
Their relationships with and responsibilities to
customers
Compliance with laws and regulations
Acting in a professional and ethical manner
Protection of business assets
Disclosure of conficts of interest
Prohibition of any conduct involving dishonesty,
fraud, deceit or misrepresentation including insider
trading.
The complete IDLC Code of Conduct can be read at page
No. 8.
Dissemination of the statement of ethics and Code of
Conduct
All IDLC employees are required to sign an annual
declaration confrming that they have read and
understood the IDLC Code of Conduct.
Boards commitment to establishing high level of
ethics and compliance within IDLC
The IDLC Board acknowledges its responsibility for
ensuring that the companys business activities are
conducted in accordance with the highest standards of
ethics and compliance.
The Board views adherence to ethical standards and
compliance as an integral part of the broader Corporate
Governance framework and seeks to adopt a holistic
approach in ensuring its implementation.
As part of this, it has instituted a number of approaches
to underline its commitment to high standards of ethical
behavior:
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Setting down standards of expected behavior
through the formulation and communication of
a company Code of Conduct;
Installing a system of internal controls, which is
reviewed, evaluated and updated on an ongoing
basis;
Bedding company policies and procedures in
ethical foundations so as to ensure that ethical
considerations are integrated in day to day
decision making, activities and processes;
Establishing a clearly defned organisation
structure that assigns responsibility and
authority for the conduct of organizational
functions while at the same time ensuring
accountability for individual actions;
Establishing a variety of monitoring mechanisms,
including the creation and empowerment of
an operationally independent internal audit
team with reporting responsibilities to the audit
committee;
Ensuring instant action with zero tolerance for
identifed instances of unethical and /or non-
compliant behavior.
In addition to the above, in compliance with the revised
Corporate Governance guideline issued by the BSEC, the
Board shall lay down the Code of Conduct of all Board
members and annual compliance of the code to be
recorded.
Accordingly, the Board of IDLC Finance Limited designed
the Code of Conduct of all the members of the Board its
annual compliance has been recorded.
Existence of efective anti-fraud programs and
controls
In recent times, the company has come to identify
the risk of fraud as one of the emerging issues in the
overall risk management sphere. Planned anti-fraud
initiatives include the introduction of a whistle blowing
mechanism. A whistleblower policy has already been
formulated and placed before senior management for
review and approval. Additionally, emphasis is being
placed on the strengthening of existing process or
activity level anti-fraud controls which are embedded
within the overall system of internal controls.
Redress of investors complaints
IDLC has a formal complaints management process that
is open to all stakeholders including both investors and
customers. There is a dedicated Complaints Cell headed
by a senior member of management for dealing with
complaints. Complaints may be dropped at complaints
boxes kept at all IDLC branches or may be submitted
online at the IDLC website at: www.idlc.com .
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Simplicity
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We believe that CSR is a self-regulating mechanism
that helps an organization assume responsibility for its
own actions and decisions, and conduct its business in
a responsible manner by integrating the 3 Ps: People,
Planet and Proft, meeting present needs without
compromising the rights of the future generations. And
a business thus conducted is known as a Sustainable
Business.
3 Ps:
People, refers to the community in which we live and
conduct our business;
Planet, refers to the surrounding environment, and
Proft, refers to the economic proft generation, which is
vital for any organization to survive in the long run.
WHY CSR?
Organizations with strong CSR commitment are more
likely to gain advantage over competitors in terms of:
Brand Promotion | Brand Diferentiation | Attracting
and Retaining Talents | Higher Employee Commitment
| Gaining Customer and Investor Trust | Better Business
Prospects | Building Brand Image
MEMBERSHIPS WITH SUSTAINABILITY INITIATIVES
IDLC became members with a number of voluntary local
and global initiatives in late 2010 to conduct its CSR
activities in globally acceptable standards:
UNGC (United Nations Global Compact), promoting
10 principles sustainable practices in the areas
of Human Rights, Labor, Environment and Anti-
corruption;
UNEPFI (United Nations Environment Programme
Finance Initiative), promoting environmentally
responsible practices among fnancial institutions
worldwide; and
CSR Centre, promoting the concept of CSR among
the corporate houses in Bangladesh, while acting
as the local network of UNGC. IDLC also has
representation in the Board of the CSR Centre.
Although these initiatives are voluntary in nature,
compliance is mandatory to continue membership.
HUMAN RESOURCE MANAGEMENT
At IDLC, we promote a work environment where
diversity is embraced, where people are evaluated
based on their merit and performance, and where
colleagues treat each other with respect and dignity. We
ofer challenging prospects to young and competent
professionals, make career development opportunities
widely available, and encourage employees to attain
both their professional and personal goals. To put it
simply, we strive to continue being a company where
the best people want to work.
Corporate Social Responsibility (CSR) at IDLC
CSR is a self-regulating mechanism that helps an organization assume responsibility
for its own actions and decisions, and conduct its business in a responsible manner
by integrating the 3 Ps: People, Planet and Proft, meeting present needs without
compromising the rights of the future generations...
CORPORATE SOCIAL RESPONSIBILITY
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HEALTH AND SAFETY
IDLC provides comprehensive life and hospitalization
insurance coverage to its employees. Moreover, health
awareness sessions are also organized with third-party
service providers on a regular basis.
IDLC is currently conducting a vaccination program
against Hepatitis B and Cervical Cancer for its employees
and their family members. After completion of the frst
batch in December 2012, the second round began in
February 2013, due to be completed next year.
DEVELOPMENT OPPORTUNITIES
IDLC ofers a variety of in-house, foreign, and
customized training programs suiting specifc needs of
its employees, for both their personal and professional
development. In 2012, BDT 20.59 Million was invested in
training programs, in participation of 1,751 employees
across the IDLC Group.
Moreover, IDLC ofers Internship Programs to fresh
graduates of leading universities, providing them the
opportunity to familiarize with corporate culture and
work environment, and develop competitive skills in the
process.
FEMALE PARTICIPATION
We strive to strike the balance between male and
female employees in our total workforce, particularly
at the management and decision-making levels. With a
growing number of female employees across the Group,
IDLC has recently launched Ladies Forum for all female
members of the workforce, to ensure various issues
and practical challenges faced by them at work are
well understood and addressed, and accordingly future
strategies are developed.
ENVIRONMENTAL SUSTAINABILITY
CARBON FOOTPRINT ANALYSIS
IDLC conducted carbon footprint analysis of three of
its branches in May 2012, in order to measure Green
House Gas (GHG) emission from major sources including
electricity, diesel (used in generator), octane, CNG
(for vehicles), paper, organic waste and air travel. The
three-month long study by Waste Concern Consultants
revealed total carbon emission of 764 tons per year, as
of 2011. The chart shows emission from major sources.
To minimize and/or neutralize this carbon footprint,
IDLC is gradually undertaking both internal and external
measures including tree plantation, use of environment-
friendly technologies and energy-ef cient devices,
green fnancing etc.
PLANTATION INITIATIVES
To play its part in better environmental management
and reduce its carbon footprint, IDLC regularly
undertakes plantation initiatives. In 2012, our major
activities included Community Plantation Program at
Satchari, Sylhet, and Tree Plantation at Mipur DOHS.
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Community Plantation at Satchari, Sylhet
In August 2012, IDLC undertook a Community
Plantation initiative at Satchari, Habiganj, Sylhet,
combining alternative livelihood opportunities and
biodiversity conservation with tree plantation.
Under this project, 7,500 saplings of local varieties of
fruit-bearing and medicinal species were planted across
750 households from the core zone and bufer zone
of the Satchari protected forest area. Priorities were
given to households
with high dependence
on the forest resources.
The income level of
these households are
expected to increase
after 2/3 years, from
selling fruits, woods and
others products from
these trees, and in the
process, reducing their
dependence on forest
resources.
The project was
undertaken in
partnership with IPAC (Integrated Protected Area Co-
management) project under USAIDs Nishorgo Network,
and Satchari Nishorgo Sangastha (SNS), the local co-
management committee at Satchari, was responsible for
implementation and monitoring, under an MoU signed
with IDLC.
165 tons of CO
2
emission reduction
targeted per year
Tree Plantation at Mirpur DOHS
In September 2012, IDLC planted 700 saplings of local
varieties in Mirpur DOHS, the newest and largest DOHS
area in Bangladesh housing defense of cers and their
families. IDLC is the frst private organization to be
undertaking such an initiative in that area.
15.4 tons of CO
2

emission reduction
targeted per year
IDLCs plantation initiatives were further supplemented
by a country-wide campaign by Musa Ibrahim, as
detailed later in this section.
ENVIRONMENTAL AWARENESS CAMPAIGN IN SCHOOLS
IDLC has initiated an environmental awareness
campaign across diferent schools in Dhaka. As part of
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63
this campaign, half-day sessions are conducted in the
schools, in participation of 50 students. The sessions
consist of presentations, workshops and team-based
activities, where the students are asked to identify
causes and results of environmental pollution and
wastage of resources, while suggest feasible and
easily adaptable solutions to mitigate these problems.
Moreover, stickers with responsible messages and
tri-color waste bins for source-separation of waste
materials are also provided for use in the schools.
Till date, the sessions have been conducted at Udayan
Higher Secondary School, Viqarunnisa Noon School
and College, Bangladesh International School and
College, Jhigatola Government High School and Dhaka
Residential Model College.
The sessions are being conducted by LEADS (Livelihood
Education and Development Services), a social
organization of TRK Consultancy Services, while IDLC is
supporting the program as sponsor and joint organizer.
ENVIRONMENT-FRIENDLY TECHNOLOGIES
Server Virtualization
IDLC initiated server consolidation and virtualization
process back in 2010, with the objective of capacity
optimization, cost minimization, and reduction of
power consumption and CO
2
emission, and in the
process, creation of a greener IT infrastructure across the
organization. The following table summarizes the results
achieved so far:
Particulars 2010 2011 2012 2013*
No of physical
servers 28 27 23 20
No of virtual
servers (after
consolidation) 2 11 29 38
Reduction
in power
consumption
(in kWh) 14,000 77,000 203,000 266,000
Reduction in
CO2 emission
(in tons) 8 44 116 152
Video Conferencing
IDLCs video conferencing facility connects fve major
branches with the Corporate Head Of ce, on an average
saving 45,800 km of traveling and 8.71 tons of CO
2

emission per year from meetings conducted through
video conferencing.
In addition, we are undertaking another technology
project aiming to reduce paper usage in the of ce.
BICYCLE TOUR OF BANGLADESH
IDLC sponsored a country-wide campaign titled
Bangladesh is marching forward: Lets visit the country
on Bicycle, a campaign by Musa Ibrahim, the frst
Bangladeshi to conquer Mount Everest. During this
25-day campaign across the country, Musa Ibrahim
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and his team covered 90 educational institutions in
40 districts, carrying messages of green education,
responsible environmental practices, importance of
tree plantation, awareness against drug abuse, and the
liberation war of 1971. 630 saplings of local varieties
were also planted in the school premises during this
initiative, which are expected to reduce CO
2
emission
by 13.86 tons per year. Employees from diferent
branches of IDLC also participated in these programs in
their respective areas.
While IDLC was the Green Partner, sponsoring the
campaign, it was jointly organized by Everest Academy
and Prothom Alo Bondhushava, and Meghna Group was
the Cycle Partner.
This initiative combined both IDLCs commitment
towards environmental awareness creation among
the youth, and tree plantation for managing its carbon
footprint.
SAFEGUARDING LENDING OPERATIONS
To control direct or indirect environmental impacts
by IDLC-fnanced projects, IDLC incorporated
Environmental Risk Management (ERM) Guidelines
of Bangladesh Bank in its credit appraisal process,
assessing and rating environmental risks of projects
based on Environmental Factors external to the
Projects and Environmental Management System of
the Borrower.
Taking this initiative one step further, IDLC has recently
incorporated an additional checklist to further assess
environmental and social issues related to the projects.
The checklist addresses Human Rights issues such as
wage levels, overtime and leave facilities in comparison
with industry standards, health and safety standards
at the workplace, presence of adequate fre-fghting
mechanisms etc.; Labor issues such as use of child
labor or forced/bonded labor; gender balance within
the workforce etc.; Environmental issues such as use of
energy-ef cient products and processes, conservation
measures, percentage of raw materials that are
recycled/reused in production, waste disposal methods,
environmental management plan of the organization
etc., and lastly, Anti-corruption policies and practices
of the organization related to non-compliance with
existing rules and regulations.
The checklist will be considered during the fnal credit
decision. This voluntary approach to further regulate
our credit decision refects IDLCs strong commitment
in ensuring environmental and social safeguard of the
projects, while creating a sense of accountability for the
borrowers.
WORLD ENVIRONMENT DAY
IDLC observed World Environment Day on June 5 2012
by distributing pot plants among its deposit clients with
the message Lets make a greener planet!. Considering
the importance of tree plantation in the context of
Bangladesh, this efort was much appreciated by our
clients.
COMMUNITY EMPOWERMENT
IDLCs initiatives for community empowerment are a
combination of sustainable measures over the long
run, focusing mainly on skills development of the
underprivileged segment, and a diverse range of
philanthropic activities.
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RMG sector is the highest foreign-currency earner and one of the largest employment providers in Bangladesh.
The session arranged by IDLC brought together stakeholders from both public and private sectors, including
representatives from diferent RMG companies from IDLCs portfolio of clients, with the objective of addressing
relevant issues for devising a sustainable skills development model that will be benefcial for all. At present, IDLC is
exploring feasibility of initial technical training by a training partner, followed by on-the-job training at the factories
and subsequent recruitment, subject to proper skills assessment by the RMG companies.
Distribution of Blankets and Warm Clothes
Bangladesh recorded its lowest temperatures in over 40
years this winter and normal work and life were seriously
disrupted mainly in the northern parts of the country,
mostly afecting the people at the bottom of the income
ladder. In this back-drop and as part of similar initiative
every year, IDLC distributed 5,000 blankets and
warm clothes among the extreme poor community in
diferent areas of Bogra, Natore, Sirajganj, Gaibandha,
Lalmonirhat, and the char areas of Nilphamari and
Kurigram in North Bengal, and Jessore.
Mr. S.M. Ferdous Hossain, DGM, SME & Special
Programmes Department, Bangladesh Bank, was
present as the Special Guest in the distribution program
at Nilphamari. Senior management of cials from IDLC
were also present in these events.
Diferent phases of the distribution were organized in
cooperation with various NGOs, including BRAC.
In addition, IDLC also provided blankets to Bangladesh
Thalassaemia Hospital (BTH) to provide better care for
its patients. IDLC has been a partner of BTH in arranging
blood donation programs in its diferent branches for
helping out the patients.
Moreover, employees of IDLCs Chittagong branch
donated funds for purchase of blankets, and distributed
those among the street people with the help of Power
of Youth, a voluntary youth club in Chittagong. Besides,
employees from all branches of IDLC also donated a
large volume of warm clothes for distribution among
the poor.
IDLC partners with SEID Trust
IDLC is sponsoring 15 specially-challenged children from
SEID Trust for one year, providing them better education
and healthcare facilities. SEID Trust is a voluntary
non-government organization working for the rights
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Sustainable Livelihood Generation
IDLC arranged a discussion session in September 2012 on Partnership for Sustainable Development, targeting
skills development of the underprivileged people and their subsequent placement in the Ready Made Garments
(RMG) sector.
66
and social inclusion of underprivileged children with
physical and mental disabilities, including autism, and
IDLC has been a regular contributor to SEID Trust for
more than 7 years.
IDLC is assisting Shishu Bikash Chhaya, a residential
centre providing better education and healthcare
facilities to underprivileged children.
The centre, located at Old Dhaka, houses ffteen
children, mostly orphans or from broken families in the
slum areas. The children have been enrolled in diferent
government schools, and the centre makes every efort
to nurture their talents at home. IDLC sponsored the
centre for one month in October 2012.
IDLC has recently co-sponsored Bijoy Parbon a
three-day cultural event arranged by Utse Bangladesh
in celebration of our Victory Day on December 16, and
cultural diversity of the country. This event, being the
frst of its kind, was arranged by Utse Bangladesh at
the University of Dhaka, and was marked by various
activities in participation of renowned public fgures
from music, sports, literature, fashion, adventure etc.
The event committee comprised of Dr. AAMS Arefn
Siddique, Honourable Vice Chancellor, University of
Dhaka; Dr. Anowar Hossain, Honourable Vice Chancellor,
Jahangirnagar University; Professor Abdullah Abu
Sayeed, Founder Director, Bishwa Shahitya Kendra; Mr.
Anisul Haque, renowned writer and journalist; Mr. Abed
Khan, CEO, ATN News; and many other distinguished
personalities.
In October 2012, IDLC arranged a blood donation
program at its Sylhet branch, where employees, clients
and other stakeholders donated blood for Bangladesh
Thalassaemia Hospital and Bangladesh Red Crescent
Society.
A total of 104 bags of blood were collected through the
program.
IDLCs IT Department has developed a website for
LEADS as part of its employee volunteering initiative.
IDLC employees regularly donate their Zakat funds
to assist IDLCs philanthropic activities with various
organizations.
IDLC assisted Sylhet Diabetic Hospital for installation
of a dialysis machine for providing better treatment
facilities to its patients.
STAKEHOLDER ACCOUNTABILITY
Starting from 2012, IDLC publishes an Annual
Sustainability Report, detailing its commitment,
initiatives, achievements and challenges faced in the
area of CSR and Sustainable Business. IDLC is the frst
and only fnancial institution in Bangladesh to publish
such a report, on a voluntary basis, which refects our
commitment for transparency and accountability
towards our stakeholders.
Moreover, regular disclosure of our activities are made
in IDLCs website, MBR (a monthly publication of IDLC
for our internal and external stakeholders), and press
releases, while employees are informed through emails.
Besides, IDLC also conducts CSR sessions during
orientation programs for new recruits, to better inform
them regarding IDLC s CSR activities and commitments.
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67
STAKEHOLDER ENGAGEMENT IN 2012
CSR Initiatives in 2012 Stakeholders Engaged
Tree plantation at Mirpur DOHS Employees
Blood donation for Thalassaemia patients Employees, clients and other stakeholders
Donation of blankets and warm clothes Employees, Clients and Regulators (Bangladesh Bank)
Development of website for LEADS Employees
Financial assistance by IDLC employees, on top of IDLCs
contributions
Employees
Environmental awareness program for school children Employees
Environmental campaign by Musa Ibrahim covering 90
educational institutions
Employees
CSR INITIATIVES IN 2011
Major initiatives during 2011, and their outcome/current status/follow-up activities, have been detailed below:
Initiatives in 2011 Outcome /Current Status /Follow-up activities
CSR orientation program for employees across the
IDLC Group;
CSR sessions are being conducted as part of orientation
program for new recruits;
Internal campaign for preservation of resources such
as electricity, water, paper etc.
Reduction of electricity and paper consumption by 23
percent and 53 percent respectively over a period of three
months;
Environment-friendly technologies, namely server
virtualization and video conferencing facility;
Reduction in power consumption by 77,000 kWh and
203,000 kWh, and CO
2
emission by 44 tons and 116 tons,
in 2011 and 2012 respectively
Plantation of 1,000 saplings in the University of
Dhaka;
Plantation of 7,500 saplings at Satchari, Sylhet, and 700
saplings at Mirpur DOHS
Carbon footprint analysis across three branches; Internal and external measures are being undertaken for
direct reduction and/or neutralization of IDLCs carbon
footprint;
Partnering with CRP (Centre for Rehabilitation of the
Paralyzed);
Assisting Ibrahim, a patient at CRP, by using one of his
mouth-paintings as the theme of IDLCs eid greeting card;
Blood donation program arranged at IDLCs
Corporate Head Of ce and Dilkusha branch for
Bangladesh Thalassaemia Hospital;
Blood donation program arranged at IDLCs Sylhet Branch
in October 2012 and at Chittagong Branch in February
2013;
Donation of educational and healthcare items to
LEADS for its children;
Development of a dedicated website for LEADS by IDLCs
IT Department;
Regular contribution to SEID Trust; Sponsoring 15 children of SEID Trust for 2013;
Donation of 1,200 blankets and warm clothes
across 22 locations in North Bengal and Jessore
(continuing);
Donation of 5,000 blankets and warm clothes in various
areas of North Bengal and Jessore;
Donation of computers in three schools in Jessore; One time contribution.
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Event Highlights
1. IDLC unveiled new logo and committed to Financing Happiness
2. The 27th Annual General Meeting (AGM) of the shareholders of IDLC Finance Limited was held at the Trust Milonayaton,
3. IDLC was awarded the First Position as the Best Corporate in the Non-Banking Financial Institution Sector at The Institution
of Cost and Management Accounts of Bangladesh (ICMAB) Award 2012
4. IDLC bagged 2nd position in the 12
th
ICAB National Awards for Best Presented Annual Reports 2011
5. IDLC & IDCOL Arrange Syndicated Term Loan Facility for ECPV Chittagong Limited
EVENT HIGHLIGHTS
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3
2
4
5
69
6. IDLC Finance Limited and The City Bank Limited signed fund raising agreement of USD 46.50 million and
BDT 5,000 million for BSRM Steel Mills Limited
7. IDLC Investments Limited acted as Issue Manager for the IPO of Energypac Confdence Power Venture
8. IDLC signed agreement with Waste Concern Consultants for Carbon Footprint Analysis of IDLC branches
9. Best Holdings Ltd. Signed BDT 4.60 Billion Syndicated Fundraising Deal with IDLC Finance Ltd. to Setup Le Meridien Dhaka
10. IDLC Finance Limited Held Workshop on Anti-Money Laundering & Anti-Terrorism Regulations
EVENT HIGHLIGHTS
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Our human resources
IDLC believes its human resources are the foremost facet
of building and running the Company. Each and every
employee is considered, developed and motivated to
contribute optimally towards the achievement of corporate
goals.
Profciency
Dynamic and Ever-Innovating work force
Highly efective leaders & managers
Healthy Work Environment
Equal Development Opportunities for all
Highest Ethical Standards, Credibility and
Compliance
Good Corporate Governance
Respect
Maintain positive, friendly and respectful ambiance
Create an environment of trust and support to work
as a team
Act with compassion and empathy
Assist to be optimistic, courageous, innovative,
accountable and compliant
Strength of IDLC- Its Human Resources
IDLC considers its human resources as the most important
assets for which the company grows and achieves its
desired performance level. IDLC continues to implement
efective human resources policies and procedures with
a view to ensure the employees development as well
as achieving the corporate goals and objectives. IDLC is
more focused on hiring talented human resources and
placing them in the right position so as to attain maximum
outcome. These qualifed resources contribute to their
fullest and take the Company to the next level.
Reputation in marketplace gained over 27 years.
A diverse, highly skilled, productive, healthy, and
ef cient workforce;
Full team engagement;
Retaining top talents
Efective Work design;
Excellent standards in business and corporate
Governance;
First-rate networking with regulators, peers and
clients.
IDLC is operating for last 27 years with glory and provided
challenging career prospect for young and enthusiastic
professionals. The Human Resources Departments of
IDLC is continuously working for attaining a single goal
of attracting, retaining, growing and inspiring the most
quality people.
The human resources of IDLC are empowered by as follows:
Reputation in market gained over last 27 years
A diverse, highly skilled and ef cient workforce
Our Human Capital
IDLC considers its human resources as the most important assets for which the
company grows and achieves its desired performance level. IDLC continues to
implement efective human resources policies and procedures with a view to ensure
the employees development as well as achieving the corporate goals and objectives...
OUR HUMAN CAPITAL
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Efective HR policies and programs to retain key
people
Team engagement
Efective internal communication and free fow of
ideas
Excellent environment of corporate Governance
Exceptional networking with regulators, peers and
clients
IDLC is operating in this industry for last 27 years with
glory and providing challenging career prospect for young
and enthusiastic professionals. The Human Resources
Department (HRD) of IDLC is continuously working for
attaining a single goal of attracting, growing, retaining and
inspiring the most quality people.
The staf strength of the Company as on December 31,
2012 and for the previous two years are summarized below:
Our Human Resources Department (HRD) Mission
The HRD of IDLC is committed to work strategically
with the diverse business segments in identifying
and responding to its changing needs. As a strategic
business partner, IDLCs HRD develop a work setting that
thrives on diversity, individual and organizational high
productivity and performance, continuous improvement,
and exceptional customer service. We are dedicated to
construct an outstanding service-focused culture as well
as maintain work life balance. With encouraging employee
engagement, we foster the attitude of teamwork and
quality in our day-to-day operations.
Merit Based Recruitment
The purpose of the IDLCs Merit-Based Recruitment and
selection process is to ensure that vacancies are flled
by the most competent incumbents. IDLC gives equal
employment opportunity to all applicants, without
regard to race, religion, sex, age, disability or any other
criteria permissible by the statutory law of the country.
Recruitment and selection are done based solely on job-
related criteria. The recruitment and selection process
are consistently applied and promote fairness, diversity
and transparency. The process is complied with all State
laws, regulations and policies. In IDLC, recruitment is done
through following steps:
Recruitment requisition
Collection & selection of CV
Interview
Arrange written test, Presentation etc.
Finalization of Recruitment
Performance Appraisal
IDLC is a solely performance driven Company. Our
Performance Appraisal is the single tool that enables the
Company to measure the performance of an individual
and plan their future developments accordingly. In IDLC
the main motive of performance appraisal system is to
maximize ef ciency of companys objective with guiding
to achieve the each stafs career objective. Performance
Appraisal System is fully structured to assess the
competency of all the full time employees of the Company.
OUR HUMAN CAPITAL
OUR GOVERNANCE
Annual Report 2012
72
This extensive process starts with circulation of appraisal
forms, approved by the Management.
Promotion
Promotion in IDLC signifes its managements commitment
to recognize and reward excellent performance. It
motivates employees to aspire for advancement
opportunities within the Company. It also contributes
to employee satisfaction and retention. Employees
promotions in IDLC are to be made by examining all
factors necessary to determine the best qualifcations and
capabilities to fll the position. These factors may include,
but not be limited to:
Growth in role - dimension & complexity
Resource classifcation
Individual performance track record
Leadership quality
Attitude & behavior
Vintage
Reward & Motivation
A reward is recognition of employee contributions that
have exceeded expectations for exceptional performance.
It may or may not be accompanied by monetary value.
In IDLC employees are specially rewarded by the
management to motivate and inspire to walk extra mile.
Besides that our performers receive Performance Bonus
annually in acknowledgement of their hard work, efort
and dedication. By rewarding and recognizing employees
IDLC seeks to promote performance and positive behaviors,
like
Creates motivation
Employees feel valued
Builds Self-Esteem and a Sense of Belonging
Able to think out of the box
Provides the ability of the employee to speak his or
her mind freely within
Scope for talent and skill utilization
Training and Development
IDLC recognizes the contribution that training makes to
its continuing ef ciency and proftability. The Companys
training policy refers to all employees and aims to ensure
that appropriate training is available to enable individuals
to reach a satisfactory performance level in their jobs. IDLC
develops and delivers high quality learning and initiatives
suitable to the needs of the individual employee. Whilst
we put great emphasis on human resources in training and
opportunities for development, employees are encouraged
to take responsibility for their own development. Since,
we consider our employees as our most valuable assets
we invest considerable amount, time and efort for their
personal and professional development. We assist our
employees to be the best through providing relevant
training programs and work shop both at home and
aboard.
Grievance Management and Counseling
IDLC focuses on providing a prompt and impartial
resolution of the grievance brought forward by employees
based on any kind of discrimination and deprivation. IDLC
seeks to establish a environment of equal employment
where advancement and appreciation will be solely on the
basis of merit, talent and competencies. If an employee
experiences a situation which is not in alignment with
the core values that the Company stands for, he or she is
at liberty to bring this to the notice of the management
through the mandate of this policy. Employees are assured
that their complaints will be addressed without delay and
judiciously by Mancom members of the Company. On the
other side, employees are managed and motivated though
proper counselling and revert to work further if any such
grievance rises.
Succession Planning
IDLCs management has succession plan to provide
continuity in leadership and avoid extended and costly
vacancies in key positions recognizing that changes
in management are inevitable. Our succession plan
is designed to identify and prepare candidates for
high-level management positions that become vacant
due to retirement, resignation, death or new business
opportunities. It is the policy of IDLC to assess the
leadership needs of the Company in a way to ensure the
selection of qualifed leaders that matches its mission and
goals.
HR & Compensation Committee of IDLC is a forum for the
discussion on various HR related issues of the Company.
The main role and function of the Committee is to assist
HRD in developing and administering a fair and transparent
procedure for setting policy on the overall human
resources strategy of the Company.
OUR HUMAN CAPITAL
OUR GOVERNANCE
Annual Report 2012
73
The responsibility of the committee is to ensure the
Company wide equal opportunity and transparency in
terms of
Suitable recruitment
Compensation on the basis of merit, qualifcation
and competence
Adequate training and development facilities
Performance appraisal and promotion based on
individual performance and contribution
In addition to that, any other benefts related issues that
having regard to the Companys operating results and
comparable market statistics.
IDLC as a WORKPLACE
Reasonable Working Hours
Employee enjoys favorable working hours so that
employees can make a balance between professional and
personal interests.
Health and Safety
IDLC ensures the standard workplace health and safety
that comply with the internal health and safety policies
and procedures. IDLC also develops, coordinates and
implements strategies to prevent workplace injuries and
illnesses and set standards for health and safety training. In
this regard we arrange diferent trainings on fre fghting,
vaccination programs and monthly health check up by
a prescribed physician. IDLC covers the hospitalization
insurance to ensure medical security of its employees and
group life insurance scheme to cover the unforeseen risk of
death as well. Moreover, special accidental issues related to
employee and his/her family members are reviewed at the
HR and Compensation committee and compensate them
however possible.
Place of Talent Nurturing
IDLC hunts talents whom it thinks most suitable for the
required position. Whenever possible we fll our vacancies
internally. However, we prefer external talents as it brings in
new thoughts, ideas, views and experience.
Trusted Working Environment
IDLC encourages a friendly and respectful culture in the
workplace that enables our employees to work with mutual
cooperation and maintaining coordination. IDLC always
focuses on synergistic approach. At large IDLC blends
an environment based upon trust and understanding
with each others. Likewise our top management team is
always reachable to provide support, suggestions and
continuously encourages new ideas and thoughts of the
young colleagues.
Life at IDLC
IDLC is keen to its employees as well as business and overall
social environment. Throughout the year IDLC arranges
diferent events like employees birthday celebration,
family days, picnic, celebration for new born baby, Iftar
party and sports events which help to create a strong
bonding among the employees. We arrange various
employee engagement programs, like Team building
sessions that enhance employee commitment and sense
of belongingness towards the Company. Additionally IDLC
fulfls its corporate social responsibility to the community
betterment.
Ethical Standards
IDLC adheres to the highest ethical standards and considers
it as the key to business success. The management expects
its employees to keep the statutory compliance at top
priority. Each employee is required to read and sign the
Code of Ethics every year, as a sign of recurrence to the
principle enshrined in it. Additionally IDLC encourages its
employees to act with integrity and to make a sense of
social responsibility to the community and the larger world.
Communication & Employee Satisfaction
IDLC considers communication as a critical success factor
for such a rapidly growing and knowledge based business.
Communication is given importance in a sense that it helps
to create a good network and ensures the cooperation
when required. We give emphasis on the formal as well
as informal communication system. The managers have
the key role to play in efective communication system
that brings the new ideas to contribute to better business
performance.
Additionally, IDLC provides the opportunity to conduct
face-to-face meetings through the use of Live Internet
Meetings. This type of net based communication allows
the employees to talk frequently and employees also
get the opportunity to have the introduction with the
new technology. Moreover, IDLC ensures communication
from Executive Team through diferent media and also
encourages employee feedback and remark including
group discussions, employee surveys and email dialogue.
IDLC Ladies Forum
IDLC has launched its very frst Ladies Forum, through a
formal ceremony, in participation of all female employees
from diferent level of positions, working areas and
distribution points to address their views, problems and
opinions to facilitate good working environment to female.
This Forum will give all female employees the opportunity
for networking and provide a common platform to share
and raise various issues and problems like discrimination,
harassment, negative attitude towards female and any
other issues that may afect female employees, within
the Company. This will enable IDLCs Management to
better understand and address these issues, and develop
strategies accordingly.
OUR HUMAN CAPITAL
OUR GOVERNANCE
Annual Report 2012
74
Scope of work of Audit Committee
The Committee is authorized to investigate any matter
within its terms of reference, access all documents and
information of the company, seek information from
any director or employee of the Group and co-opt any
resources (including external professional assistance)
it sees ft in order to fulfll its duties. However, the
Committee has no executive function and its primary
objective is to review and challenge, rather than assume
responsibility for any matters within its remit.
The Committee presents a summary of its activities to
shareholders and other interested parties by means of
this report, and the committee Chairman attends all
general meetings of the Companys shareholders to
answer any questions on the committees activities.
Review of fnancial statements by the Audit
Committee
Audit Committee reviewed the annual fnancial
statements for the year 2012 and placed its
recommendations to the Board of Directors.
Developments during the year
The following developments have taken place at IDLC in
relation to the internal control process in 2012:
Risk-based internal audits for all departments
and branches for the year 2012 were successfully
completed. Audited departments and branches
were assigned audit ratings in accordance with
pre-established criteria.
Accuracy of migration of data of all product
accounts from old system to new system
(Flexcube) was checked by internal audit.
An organisation wide drive to develop Standard
Operating Procedures (SOP) for various
departments and functions was launched in
2012.
Field visits of clients, frst introduced in 2011,
were continued in 2012 with coverage being
extended to regions other than the cities of
Dhaka and Chittagong.
IDLC Guidance Notes on Prevention of Money
Laundering and Terror Financing was formally
approved and adopted.
Workshops were organized by ICC department
on Anti-Money Laundering, Anti-Terror Financing
regulations and importance of internal controls
and compliance in diferent branches as part of
overall awareness building eforts.
All this enables the Committee to evaluate major
business risk areas, so as to ensure proper controls are
in place, which is well managed, providing accurate,
appropriate and timely information to the Board
of Directors, management, regulatory bodies and
shareholders.
External audit
Hoda Vasi Chowdhury & Co, Chartered Accountants,
a partnership frm registered in Bangladesh and
Independent Correspondent Firm to Deloitte Touche
Tohmatsu, acted as the external auditors to the
company throughout the year. The external auditors are
not engaged by the company on any material non-audit
work such as:
Appraisal or valuation services or fairness
opinions;
Financial information systems design and
implementation;
Book-keeping or other services related to the
accounting records or fnancial statements;
Report of the Audit Committee
REPORT OF THE AUDIT COMMITTEE
OUR GOVERNANCE
Annual Report 2012
75
Broker-dealer services;
Actuarial services; and
Internal audit services
Independence of External Auditor
As a policy, the Committee prohibits the external
auditors from performing any work that they may
subsequently need to audit, or which might otherwise
create a confict of interest. The Committee also
monitors the balance between audit and non-audit
related functions to ensure that auditor independence
can be shown to be maintained. The Chief Financial
Of cer is permitted to engage the external auditors on
matters that do not create such conficts.
The Audit Committee appraised the expertise, resources,
independence and objectivity of the external auditors
and also reviewed their efectiveness as external
auditors before reaching the recommendation to the
Board that their re-election should be proposed to
shareholders.
Resolutions of the Audit Committee meeting
The Committee met four times during 2012 to carry out
the following tasks:
Reviewed the draft audited Financial Statements of
31, 2011;
Discussed with external auditor and management
prior to the fnalization of the Financial Statements
of IDLC Finance Limited for the year ended
December 31, 2011 as per Bangladesh Bank circular
no. 13 dated October 26, 2011;
Reviewed the report of the Audit Committee for
incorporation in the Annual Report 2011;
Reviewed and discussed the Management Letter,
by the external auditors Hoda Vasi Chowdhury &
Co, for the year ended December 31, 2011 on the
annual audit on fnancial statements of IDLC Finance
Limited;
Recommended re-appointment of Hoda Vasi
Chowdhury & Co, Chartered Accountants, as auditors
of the Company for the year 2012;
Reviewed the unaudited quarterly and half-yearly
Financial Statements of IDLC Finance Limited for the
year 2012;
Reviewed and approved IDLC Guidance Notes
on Prevention of Money Laundering and Terror
Financing;
Reviewed the Bangladesh Bank Inspection Report
on corporate head of ce of IDLC as of June 30, 2011,
and, Management responses to the report;
Reviewed the internal audit reports;
Reviewed action plan to comply with the revised
corporate governance guidelines issued by
Bangladesh Securities and Exchange Commission
(BSEC);
Based on the review and above discussions, the Audit
Committee is of the view that the internal control and
compliance procedures are adequate to present a true
and fair view of the activities and fnancial status of the
company and to ensure that its assets are safeguarded
properly.
Farooq Sobhan
Chairman, Audit Committee
REPORT OF THE AUDIT COMMITTEE
OUR GOVERNANCE
Annual Report 2012
76
Annual Report 2012
Section Name....
Trust & Respect
77 GOING CONCERN REPORT
HOW WE ARE ASSESSED
Annual Report 2012
Assessment Report on the Going
Concern Status of IDLC
Going Concern is a fundamental accounting concept that underlies the preparation
of fnancial statements of companies. Under the Going Concern concept it is
assumed that a company will continue in operation and that there is neither the
intention nor the need either to liquidate it or to cease trading.
The purpose of this Going Concern Statement is to
bring together the requirements of company law,
accounting standards and the Listing Rules on going
concern.
The management of IDLC has made this assessment
based on accounting period ended on or after
December 31, 2012.
The managements assessment of whether the
company is a going concern involves making
appropriate inquiries including review of budget
and future outcome of inherent risk involved in the
business.
Considering the following major indicators, the
managements of IDLC have reached to a conclusion
that the fnancial statement for the year 2012 is
prepared based on going concern assumption:
Financial indications
A steady trend of current ratio:
IDLC has a optimum current ratio over the last few years
which we can observe from our fnancial highlights at
page No. 82. It means that the Company has the ability
to meet its short-term obligations out of short-term
assets.
Fixed term debt with realistic renewal or repayment:
At the close of fnancial year 2012, total borrowing from
other bank and fnancial institutions of the Company
was BDT 4,334 million. Based on our past experience
we can say that there is every possibility that major part
of the debt would be renewed further or can be repaid
from its existing cash fow.
Less reliance on short term borrowing:
At the end of 2012, total short term borrowings of the
Company were BDT 550 million, representing only
12.69% of total borrowings that indicates the Company
has least reliance on short term borrowings.
Continuous fnancial support by lenders/depositors:
The Company has a very good track record and
reputation in settlement of its obligation with its
lenders/depositors. The company is able to increase
the level of confdence of depositors which results a
signifcant increase (30.39%) of our deposits in 2012.
Positive operating cash fows:
Cash fow statement of the Company for the year 2012
shows positive operating cash fows of BDT 426 million.
Statement of liquidity also shows overall positive
liquidity gap representing strong ability to meet current
and future obligations.
Positive key fnancial ratios:
The Companys fnancial ratios indicate a sound
fnancial strength and prospects of the company as
evident from fnancial highlights given at page No. 82 of
this Annual Report.
Consistent payment of dividends:
IDLC has been paying dividend consistently to its
shareholders over the years. We refer to fnancial
highlights at page No. 82 of this Annual Report to show
our steady Dividend payment records.
Moreover, the company has paid stock dividend @ 30%
and @ 25% in 2012 and 2011, respectively that refects
Companys long-term viability in operational existence.
Credibility in payment of obligations:
IDLC has strong credibility in terms of payment of
its obligations to the lenders. The Company is very
particular in fulflling the terms of loan agreement and
never been defaulter, even in terms of convenient.
78 GOING CONCERN REPORT
Increasing trend of investment portfolio and
performance growth:
IDLC has excellent growth in its operating performance.
Companys investment in long-term fnance, real estate
fnance and car loan have increased by 52.58%, 18.39%
and 6.01%, respectively in 2012 in compared to 2011.
Operating indications
No key management turnover:
During the year 2012, the company has not experienced
of any event of turnover in key management position.
Employees have long term commitment and loyalty to
the Company.
Average length of services of an employee at IDLC
is 3.64 years in 2012 (3.20 years in 2011). A report on
human Resource has been given at page No. 70 of this
Annual Report.
Expansion of business:
IDLC is continuously expanding its segment
geographically by opening new branches (three new
branches) in diferent places considering the economic
signifcance. Company has also strengthened its
product/service line by increased marketing eforts and
extensive investment.
Corporate environment and employee satisfaction:
There exists a very good corporate environment in the
Company. This is being refected at our Statement of
Corporate Governance and Report about our Human
Capital.
Other indications
Maintenance of Capital Adequacy Ratio (CAR):
As per DFIM Circular No. 14, dated December 28, 2011
of Bangladesh Bank on Prudential Guidelines on
Capital Adequacy and Market Discipline for Financial
Institutions has come into force from January 01,
2012. As per the guideline Financial Institutions
(FIs) are required to maintain CAR @10%. Before its
implementation, FIs have been reporting CAR to
Bangladesh Bank based on draft BASEL Accord for
Financial Institutions .

In each quarter of 2012, IDLC Finance Limited as well
as Group had CAR above the minimum requirement of
10%.
Details are given in note No. 13.1 of the fnancial
statements
at page No. 188.
Strong equity base:
As on 31 December 2012, total equity of IDLC stands
at BDT 4,693 (BDT 3,980 million in December 31, 2011)
representing an increase of 17.91% over last year that
refects companys long-term viability.
Strong CAMEL rating:
CAMEL rating is used by Bangladesh Bank as a tool for
evaluating the strength and performance of a non-
banking fnancial institution. The composite rating
adjudged by Bangladesh Bank signifes satisfactory
performance of IDLC. The report contained no adverse
material observation of Bangladesh Bank on the
activities of the company.
Changes in Government policy:
Management anticipates no signifcant change in
legislation or government policy, which may materially
afect the business of the Company.
HOW WE ARE ASSESSED
Annual Report 2012
79 IMPACT OF BUSINESS ENVIRONMENT
HOW WE ARE ASSESSED
Annual Report 2012
Business Environment and Its Likely Impact
on the Financial Performance of IDLC
Some statements in this annual report such as IDLCs plans, anticipation, beliefs, expectations etc., are forward
looking. These statements involve uncertainties and actual achievement may difer from plan and expectation due to
changes in the business environment. Following are some major factors that may afect the business environment:
Change in countrys general economic condition;
Natural calamities and political disturbances;
Change in commodities price level;
Further volatility in interest rate in the market;
Further volatility in capital market;
Changes in Government policies, viz,
Changes in corporate income tax rate and VAT;
Changes in Monetary policy of the Bangladesh Bank;
Increase in provisioning requirements;
Increase in statutory liquidity reserves & cash reserve requirements by Bangladesh Bank;
Change in Bangladesh Banks re-fnancing Scheme
80
OUR PERFORMANCE SUMMARY
Annual Report 2012
PERFORMANCE INDICATORS GROUP
Performance Indicators Group
In spite of the global crisis, afecting the economy of Bangladesh, and the bearish
treads in the capital market, IDLC performed impressively throughout 2012 across
various business segments...
81
Annual Report 2012
PERFORMANCE INDICATORS GROUP
82
Key Operating and
Financial Highlights Group
(BDT in million)
Particulars 2008 2009 2010 2011 2012 Growth (%)
Financial Performance
Lease and Term loans disbursed 3,412 3,750 4,345 8,517 12,304 44.46%
Housing fnance disbursement 1,612 1,839 2,121 2,586 2,736 5.81%
Short term fnance portfolio 336 317 468 821 581 -29.21%
Lease Finance 4,734 4,383 4,107 4,547 5,479 20.50%
Real estate fnance assets 3,915 4,789 5,605 6,979 8,262 18.39%
Total assets 17,342 22,681 26,930 31,165 37,784 21.24%
Long term liabilities 12,115 18,792 21,745 25,299 32,492 28.43%
Term deposit balance 8,249 9,780 12,373 16,828 22,008 30.78%
Net current assets 1,559 3,645 4,172 3,676 2,797 -23.93%
Operational Performance
Operational income 1,179 1,913 3,047 2,160 2,403 11.27%
Operational expenses 352 490 966 913 1,058 15.83%
Financial expenses 1,553 1,687 1,822 2,364 3,103 31.23%
Proft before tax 708 1,273 1,956 1,217 1,252 2.93%
Net proft after tax 406 822 1,327 500 713 42.48%
Average efective tax rate 42.57 35.46 32.16 58.88 43.07 -26.84%
Financial Ratios
Debt equity ratio (Times) 8.32 8.48 6.30 6.83 7.05 3.24%
Financial expenses coverage ratio (Times) 1.46 1.75 2.07 1.51 1.40 -7.33%
Current ratio (Times) 1.21:1 1.04:1 1.39:1 1.31:1 1.21:1 -0.08%
Return on total assets (%) 2.50 4.11 5.35 1.72 2.07 0.35
Non performing loan ratio (%) 3.97 3.43 2.84 2.32 2.09 (0.23)
Return on shareholders equity (%) 28.43 41.05 43.64 13.04 16.44 3.39
Earnings per share* (BDT) 3.28 6.64 10.72 4.04 5.76 42.48%
Dividend per share (BDT) 3.50 11.00 10.00 2.50 3.00 20.00%
Price earnings ratio (Times) 55.76 44.60 34.67 27.41 15.95 -41.79%
Dividend yield (%) 1.53 2.97 2.15 1.81 3.26 1.46
Dividend payout ratio (%) 21.55 40.14 45.21 49.47 52.08 2.61
Equity Statistics
Number of shares (No.) 2,500,000 3,000,000 6,000,000 99,000,000 123,750,000 25.00%
Year end market price per share (BDT) 2,289.00 3,703.00 4,648.00 138.50 91.90 -33.65%
Net asset value per share (BDT) 16.28 24.17 37.27 40.21 47.41 17.91%
Market capitalization 5,723 11,109 27,888 13,712 11,373 -17.06%
Market value addition 212.62 346.13 427.53 98.29 44.49 -54.73%
Shareholders equity 1,611 2,393 3,690 3,980 4,693 17.91%
* Prior years number of shares have been adjusted to refect bonus share issued in 2011.
Reasons for major deviations from earlier years have been explained in the CEO & Managing Directors Review of
Economic Environment & Business Performance.
Annual Report 2012
KEY OPERATING AND FINANCIAL HIGHLIGHTS GROUP
83
Value Added Statement
for the year ended December 31, 2012
Value added is the wealth created by IDLC through extending Corporate Financing, Consumer Financing, SME Financing,
Supplier Financing (factoring of accounts receivable and work order fnancing) and Marchent Banking Services.
The Value Added Statement shows the total worth created and how it was distributed to meet certain obligation and the
portion retained for the continued operation and expansion of the Company.
Particulars
Dec. 31, 2012
%
Dec. 31, 2011
%
Taka Taka
Value added
Operating revenue 4,784,925,268 4,191,897,873
Cost of borrowing (3,087,770,161) (2,359,226,854)
1,697,155,107 1,832,671,019
Other income 258,327,660 210,016,857
1,955,482,767 2,042,687,876
Provisions (100,889,683) 5,912,781
Operating expenses excluding staf costs and depreciation. (319,986,984) (263,077,441)
Value added 1,534,606,100 100% 1,785,523,216 100%
Distribution of value addition
To Employees
as remuneration 414,453,124 27% 343,579,079 19%
To Government 443,365,525 29% 572,153,206 32%
as taxes
To Shareholders 37,125,000 2% 247,500,000 14%
as stock dividend
Retained in the business 639,662,451 42% 622,290,931 35%
as capital and revenue reserve 552,075,269 36% 556,728,979 31%
as depreciation 87,587,182 6% 65,561,952 4%
1,534,606,100 100% 1,785,523,216 100%
Number of employees 481 409
Value added per employee 3,190,449 4,365,582
Annual Report 2012
VALUE ADDED STATEMENT
84 MARKET VALUE ADDED STATEMENT
Annual Report 2012
Market Value Added (MVA) Statement
Market value added statement refects the Companys performance evaluated by the market through the share
price of the company. This statement shows the diference between the market value of a company and the capital
contributed by investors. In other words, it is the sum of all capital claims held against the company plus the market
value of debt and equity.
The higher MVA is the better indication. A high MVA indicates the company has created substantial wealth for
the shareholders. A negative MVA means that the value of managements actions and investments are less than
the value of the capital contributed to the company by the capital market (or that wealth and value have been
destroyed).
The following statement shows how the MVA has been calculated for the year ended December 31, 2012 and 2011:

Particulars
BDT in million
2012 2011
Market value of shares outstanding 11,373 13,712
Book value of shares outstanding 4,693 3,980
Market value added 6,680 9,732
85 ECONOMIC VALUE ADDED STATEMENT
Annual Report 2012
Economic Value Added (EVA) Statement
Economic Value-Added is the surplus generated by an entity after meeting an equitable charge towards providers of
capital. It is the post-tax return on capital employed (adjusted for the tax shield on debt) less the cost of capital employed.
Companies which earn higher returns than cost of capital create value, and companies which earn lower returns than cost
of capital are deemed harmful for shareholder value.
The aim of EVA is to provide management with a measure of their success in increasing shareholders wealth: a better
measure than proft of how much the company had made for shareholders.
EVA has been calculated by the following formula:
EVA = Net Operating Proft Taxes Cost of Capital

Particulars
Amount in BDT
2012 2011
Net operating proft 1,133,455,477 1,370,469,404
Provision for taxes (443,365,525) (572,153,206)
Net operating proft after tax (NOPAT) 690,089,952 798,316,198
Charges for capital
Capital employed 4,406,069,998 3,845,264,733
Cost of equity (%) 13.41% 12.33%
Capital charge 590,853,987 474,121,142
Economic Value added 99,235,965 324,195,056
Capital employed as on December 31
Shareholders' equity 3,809,715,843 3,220,515,574
Accumulated provision for doubtful accounts and future losses 863,001,320 918,907,258
Average shareholders' equity 4,406,069,998 3,845,264,733
86 FINANCIAL HIGHLIGHTS AS REQUIRED BY BANGLADESH BANK
Financial Highlights as Required by
Bangladesh Bank
(BDT in million)
Sl no. Particulars 2012 2011
1 Paid-up capital Taka 1,238 990
2 Total capital Taka 2,940 2,575
3 Surplus/(shortage) capital Taka 238 (10)*
4 Total assets Taka 37,784 31,165
5 Total deposits Taka 22,999 17,639
6 Total loans, advances and leases Taka 32,595 26,357
7 Total contingent liabilities and commitments Taka 232 1,410
8 Loans to deposit ratio (total loans/total deposits) % 1.42 1.49
9 % of classifed loans against total loans % 2.09% 2.32%
10 Proft after tax and provision Taka 713 500
11 Classifed loans, advances and leases during the year Taka 645 594
12 Provisions kept against classifed loans, advances and leases Taka 69 (98)
13
Provision surplus / (defcit) against classifed loans,
advances and leases
Taka 165 125
14 Cost of fund % 13.41% 12.33%
15 Interest earning assets Taka 36,864 30,127
16 Non-interest earning assets Taka 920 1,037
17 Return on investment (ROI) % 2.38% 2.05%
18 Return on assets (ROA) % 2.07 1.72
19 Income from investment Taka 58 (108)
20 Operating proft per share Taka 13.59 12.59
21 Earnings per share Taka 5.76 4.04
22 Price earning ratio Times 15.95 27.41
*As per DFIM Circular No. 05, dated July 24, 2011 of Bangladesh Bank, Financial Institutions (FIs) are required to
maintain minimum paid up capital of BDT 100 crore. Shortfall in the paid up capital shall be covered within June 30,
2012, if any.
As on December 31, 2011, the paid up capital of IDLC Finance Limited was BDT 99 crore. However, the shareholders
of the Company at its 27th Annual General Meeting held on March 28, 2012 approved stock dividend @ 25% i.e. BDT
24.75 crore. Thereafter, the paid up capital stands at BDT 123.75 crore and there is a surplus in paid up capital of Tk.
23.75 crore.
Annual Report 2012
87 DIRECTORS RESPONSIBILITY STATEMENT
Statement of Directors Responsibility for
Internal Control & Financial Reporting
Responsibility for Financial statements
The Directors are responsible for ensuring that the Company keeps proper books of accounts of all the transactions
and prepares nancial statements, which give a true and fair view of the state of its afairs and prot/loss for the year.
The Board of Directors accepts responsibility for the integrity and objectivity of the nancial statements. It ensures
that the estimates and judgments relating to the nancial statements were made on a prudent and reasonable
basis, so that they reect in a true and fair manner, the form and substance of transactions, and reasonably present
the Companys true state of afairs.
The Board of Directors conrms that the International Financial Reporting Standard (IFRS) and International
Accounting Standards, as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh, have
been adhered to, subject to any material departure being disclosed and explained in the notes to the accounts.
The Board also conrms that the Company keeps accounting records, which disclose with reasonable accuracy, the
nancial position of the Company, and which enables it to ensure that the nancial statements comply with the
requirements of the Companies Act, 1994, Securities and Exchange Rules 1987, Financial Institutions Act 1993 and
Listing Regulations of Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited and amendments
thereto.
Responsibility for internal control systems
To ensure this, the Company has taken proper and suf cient care in installing a system of internal control, which
is reviewed, evaluated and updated on an ongoing basis. The Internal Control & Compliance Department of the
Company conducts periodic audits to provide reasonable assurance that the established policies and procedures of
the Company were consistently followed.
Opinion of the external auditors
The auditor of the Company, Hoda Vasi Chowdhury & Co., Chartered Accountants, have carried out annual audits to
review on the system of internal controls, as they consider appropriate and necessary, for expressing their opinion
on the nancial statements. They have also examined the nancial statements made available by the management
together with all the nancial records, related data, minutes of shareholders and Board meetings, relevant policies
and expressed their opinion.
WHAT WE STATE
Annual Report 2012
88 CEO & MANAGING DIRECTORS REVIEW
WHAT WE STATE
Annual Report 2012
CEO & Managing Directors Review
of Economic Environment and
Business Performance
GLOBAL ECONOMY 2012 AND
BEYOND
In 2012, with double-dip recession
in many developed economies,
growth has decelerated in
major developing countries
and economies in transition as
well, caused by both external
vulnerabilities and domestic
challenges including weaker export,
and higher volatility in capital fows
and commodity prices. Countries
facing sovereign debt distress
have moved even deeper into
recession, fueled by high levels of
unemployment, weak aggregate
demand, fscal austerity, high public
debt burdens, and fnancial sector
fragility.
In 2012, economies in Asia
weakened considerably as both
China and India, the regional growth
engines, faced slower exports,
tightened policies, and lower
domestic investments. Growth in
East Asia and South Asia were 5.8
percent and 4.4 percent respectively
in 2012, expected to rise to 6.2
per cent and 5.0 percent in 2013,
though still below potential. On
the other hand, Japan saw a GDP
growth of 1.5 percent in 2012
while it is expected to go down
to 0.6 percent in 2013, mainly due
In 2012, economies in Asia weakened considerably as both China and India, the
regional growth engines, faced slower exports, tightened policies, and lower
domestic investments...
Selim R. F. Hussain
WHAT WE STATE
Annual Report 2012
to phasing out of private consumption incentives,
increased tax on consumption and government
spending cuts.
The continuing social and political unrest in the Arab
states elevate risk assessment for the entire region,
expecting GDP growth at 3.3 per cent in 2013. Weaker
export activities also decelerated growth in Latin
America and the Caribbean to 3.1 percent in 2012,
although a 3.9 percent growth is projected in 2013, to
be led mainly by stronger economic performance in
Brazil.
Unemployment remained high in many developed
economies, with the situation being particularly
challenging in Europe. The unemployment rate
climbed to a record high in the Euro area during 2012,
up by more than one percentage point from a year
ago. Conditions are worse in Spain and Greece, with
more than a quarter of the working population and
over half of the youth currently without jobs. Japans
unemployment rate retreated to below 5 per cent,
whereas in the United States, the unemployment rate
stayed above 8 per cent for the most part of 2012, but
dropped from September onwards.
As per the United Nations baseline forecast, growth of
the World Gross Product (WGP) is expected below 2.4
per cent in 2013, and 3.2 per cent in 2014, forcing many
economies to continue operating below their potential.
Moreover, the global crisis will imply a sluggish pace of
poverty reduction and investments in education, health,
basic sanitation and other critical areas in developing
countries and LDCs, thus slowing the progress to
achieve the Millennium Development Goals (MDGs).
ECONOMY OF BANGLADESH - A COMPARATIVE
ANALYSIS
Bangladesh witnessed a 6.3 percent GDP growth
in 2012, balancing both positive and negative
performances throughout the year. Although quite
impressive in the context of the ongoing global
economic uncertainty, it is still below the initial target of
7%, owing mainly to a signifcantly slower agricultural
growth.
90
In December 2012, average infation stood at 8.7
percent, down from 10.7 percent in 2011. This was
contributed by food infation of 4.8 percent, down
from 8.3 percent in 2011, and non-food infation of 3.9
percent.
Export was recorded at USD 12,599.73 Million during
the July-December period of 2012, registering a growth
of 7.01 percent over the same period last year.
On the other hand, through strict monitoring and
controlling of non-essential imports, import payment
totaled USD 16,355 Million during the same period,
declining by 8.11 percent over 2011. Of this, 40.40
percent and 6.40 percent comprised of industrial raw
materials and capital machineries respectively, both
registering an increase compared to 2011, although
overall import had declined in 2012. This suggested
little or no adverse impact of the economic crisis
and restrictive policies on industrial growth, which
witnessed a robust growth of 9.5 percent in 2012,
boosted mainly by construction and small-scale
manufacturing for the domestic market. Industrial term
loan disbursement also rose by 30.69 percent to BDT
97.20 Billion during July-September 2012, whereas
SME loan disbursement rose by 27.59 per cent to
BDT 1,000.02 Billion at the end of September 2012,
compared to the same period last year. The service
sector registered a growth of 6.1 percent in 2012.
On the other hand, agricultural growth slowed down to
only 2.5 percent caused mainly by higher production
costs due to increasing prices of fertilizer, power
and fuel. However, agricultural credit disbursement
increased by 12.12 percent, amounting to BDT 56.07
Billion during the July-December 2012.
Remittance in July-December 2012 increased by
21.89 percent to USD 7,396.94 Million. This presented
an optimistic picture regarding manpower export
of Bangladesh in the coming years, when compared
against a negative growth of 6.27 percent in overseas
remittance in 2011. This stronger than expected
remittance growth, combined with our export growth
and improved foreign loan disbursement, contributed
signifcantly to the foreign currency reserve of
Bangladesh Bank, which amounted to USD 12,750.58
Million at the end of December 2012 higher by 32
percent than USD 9,634.90 Million of reserve at the end
of 2011.
The capital market of Bangladesh is yet to recover from
the crash in 2010. Continuing restrictive monetary
policies, rising interest rates, liquidity crunch, currency
devaluation and rising infation signaled a prolonging
bearish trend from the very beginning of 2012 as
well. Market capitalization stood at BDT 2,385.24
Billion, while turnover declined by 36.86 percent
compared to 2011, reducing market liquidity and
hindering secondary market performance. The primary
market got some momentum after listing of 14 IPOs
at DSE and declaration of a 20 percent provision by
Bangladesh Securities and Exchange Commission
(BSEC) in most of these IPOs. BSEC also undertook
some development measures including master plan
for capital market development, demutualization of
stock exchange, installation of surveillance software
and MSA-Plus software, revision of margin loan and
mutual fund regulations, draft guidelines on Research
and Investment Advisory Services etc., aimed at a
sustainable capital market.
Based on its strong growth prospects, adequate external
liquidity and substantial donor commitment, Standard
and Poors, a leading credit rating agency in the world,
provided Bangladesh a sovereign credit rating of BB-
in 2012, af rming a stable outlook for the economy.
Bangladesh had received the same rating in 2011
and 2010 as well. Moodys Investors Service, another
international credit rating agency, also maintained its
rating at Ba3 for Bangladesh.
FUTURE OUTLOOK
During the 2012-2013 fscal year, the Government of
Bangladesh estimates a GDP growth of 7.2 percent,
CEO & MANAGING DIRECTORS REVIEW
WHAT WE STATE
Annual Report 2012
91
which is quite optimistic compared to an ADB (Asian
Development Bank) estimation of 6 percent. Such
estimation has been based on expectations of a
growing agricultural sector, although industrial growth
and export to the European economies are expected to
come down in 2013.
RMG export is expected to remain moderate. However,
remittance is estimated to grow even more, with
increasing number of migrant workers from Bangladesh
to diferent countries, thus providing an optimistic
picture of boosting foreign currency reserve even
further.
Lack of adequate power supply and infrastructure
facilities will continue to remain a major challenge,
restricting investment activities and adding to
infationary pressure, which is projected to be around
8.5 percent in 2012-2013. However, an extended credit
facility from the International Monetary Fund (IMF)
aims to enhance macroeconomic stability, strengthen
balance of payments, and support faster and more
inclusive economic growth.
BANKING AND FINANCE SECTOR
2012 posed a dif cult year for the banking and
fnancial sector of Bangladesh, owing to the global
downturn, coupled with the biggest scandal in the
banking industry of Bangladesh the fraudulent
misappropriation of BDT 36.07 Billion of Sonali Bank,
and BDT 26.68 Billion by Hallmark Group alone. In spite
of this, the sector remained mostly resilient, attributable
mainly to the timely and relevant restrictive policy
measures by Bangladesh Bank to control money supply
and infation, greater emphasis on risk management
of the banks to avoid similar scandals in future, and
strengthened commitment for fnancial inclusion of
non-banked people.
In 2012, Bangladesh Bank worked to ensure timely
supply of adequate credit facilities to stimulate private
sector growth. Major initiatives included limiting public
sector borrowings from the banking channel, reducing
private sector credit fow to unproductive sectors,
higher interest on savings certifcates, increasing
liquidity support to banks, restricting depletion
of foreign exchange reserves, reducing import of
non-essential items, not interrupting exchange rate
deprecation to continue export competitiveness and
remittance growth, maintaining Repo and reverse Repo
rates at higher ends; and phasing out lending rate caps,
excluding agriculture and pre-shipment export credits.
In the last half of 2012, the money market showed a
clear reverse, compared to the frst six months. Demand
for inter-bank liquidity remained high during the frst
quarter, with overnight rates ranging from 18 percent
to 20 percent. The commercial banks were required
to reduce dependence on call money markets for
borrowing funds, and call money rates came down to
as low as 8-10 percent in December 2012. Repo and
reverse Repo rates remained unchanged at 7.75 percent
and 5.75 percent respectively after an upward revision
by Bangladesh Bank. The spread between lending and
deposit rates also narrowed sharply to 5.33 percent in
December 2012.
Liquidity pressure was managed to some extent by
enhanced Repo support from June 2012. Total liquid
assets of the scheduled banks stood at BDT 1,385.63
Billion in November 2012, increasing from BDT 1,254.44
Billion in June 2012. Besides a rise in foreign-currency
loans and increase of remittance, liquidity pressure
eased signifcantly with the mandate for non-Primary
Dealer (non-PD) institutions to invest 40 percent of
the notifed amount in government treasury bills and
bonds, while reducing investment by PD banks to 60
percent, from August 2012 onwards. In addition, Islamic
Inter-Bank Fund Market (IIFM) started operations in
June 3, 2012, under custodianship of Bangladesh Bank,
aiming to strengthen liquidity support to the Sharia-
based banks.
WHAT WE STATE
Annual Report 2012
92
During the July-November 2012, private sector credit
registered a growth of 4.15 percent. However, this was
lower than a growth of 6.20 percent registered over the
same period last year.
To bring in place a better risk management process,
Bangladesh Bank tightened its loan classifcation,
provision and rescheduling policies to ensure stability
in the countrys banking sector. The risk management
process related to banking operators were closely
reviewed and tightened. Six core areas of risk
management were identifed and necessary guidelines
issued for managing Credit Risk, Asset and Liability
of Balance Sheet Risk, Foreign Exchange Risk, Money
Laundering Risk, Internal Control and Compliance Risk
and Information and Technological Risk.
In 2012, Bangladesh Bank approved six more Private
Commercial Banks and three new NRB banks, aiming
expansion and strengthening of the ongoing fnancial
inclusion program by bringing un-banked people
under the banking network, while improving quality
of banking services through higher competition. The
new banks are also required to maintain a 1:1 ratio for
opening rural and urban branches, thus help increase
presence of banking services in the rural areas and
improve fnancial inclusion.
CAPITAL MARKET SCENARIO
GLOBAL, EMERGING AND BRICS
Globally, capital market observed a favorable year,
posting moderate gains in 2012. All the major
developed markets closed positively and percent of
dividend yield was at satisfactory level.
Moreover, emerging markets, except Indonesia and
Bangladesh, have also registered robust performance,
as detailed in the below table. Bangladesh has
performed the worst amongst the reported emerging
markets, while the most notable of the lot was Pakistan,
recording a 7%+ dividend yield throughout 2012. In
addition, BRICS nations, except Brazil and South Africa,
have also performed in line with the global capital
market sentiment prevailing in 2012.
Particulars
%
YTD-2012
% Div.
Yield-2012
Germany All Cap Index 26.80% 3.20%
France All Cap Index 18.70% 3.70%
China All Cap Index 17.90% 3.10%
USA All Cap Index 13.90% 3.60%
UK All Cap Index 13.20% 2.10%
Italy All Cap Index 9.20% 3.90%
Japan All Cap Index 5.40% 2.20%
Emerging Markets :
Thailand All Cap Index 36.80% 2.80%
Singapore All Cap Index 28.50% 3.40%
Pakistan All Cap Index 26.50% 7.10%
Hong Kong All Cap Index 24.20% 2.30%
Taiwan All Cap Index 13.60% 3.40%
Malaysia All Cap Index 11.70% 3.00%
Indonesia All Cap Index 1.20% 2.30%
DSE General Index -19.75% -
BRICS :
India All Cap Index 23.80% 1.40%
China All Cap Index 17.90% 3.10%
Russia All Cap Index 9.50% 3.70%
Brazil All Cap Index -1.40% 2.30%
South Africa All Cap Index -17.30% 3.20%
Source: Financial Times, DSE
WHAT WE STATE
Annual Report 2012
93
The capital market of Bangladesh, being in a position to
provide diversifcation benefts to the global investors
due to its low correlation with other markets, continued
its long bearish span for one more year in 2012. Liberal
monetary policy, relaxed regulatory framework,
overvaluation of primary market and behavioral impacts
formed and fueled a fnancial asset price bubble during
2009-2010, which ultimately saw its end on December
05, 2010 after the DSE General Index (DGEN) reached its
all time high of 8,918 points.
In the aftermath of 2010, various short and long
term measures were undertaken to restore stability
in the market throughout 2011. Though the market
occasionally rallied, the momentum did not last long.
With 2011 coming to an end, continuing restrictive
monetary policy, rising interest rates, liquidity crunch,
currency devaluation and rising infation signaled a
prolonging bearish trend from the very beginning of
2012 as well.
During 2012, 14 IPOs (10 equity stocks and 4 Mutual
Funds) got listed at DSE, adding BDT 91.63 billion to the
market capital. Bangladesh Securities and Exchange
Commission (BSEC), renamed from Securities and
Exchange Commission (SEC), declared a 20% provision
in most of these IPOs for afected small investors. The
buoyancy in the primary market put some liquidity
pressure on the secondary market.
BSEC also undertook various development initiatives
aimed at a sustainable capital market. Master plan for
capital market development, demutualization of stock
exchange, installation of surveillance software and
MSA-Plus software, revision of margin loan and mutual
fund regulations, draft guidelines on Research and
Investment Advisory Services etc. are to name a few.
In 2013, a more stable capital market scenario can be
expected than that of 2011 and 2012. With infation still
a concern, high interest rates on depository instruments
and government securities, continuation of restrictive
monetary policy, and political uncertainty may divert
fund from the capital market on a risk adjusted basis.
However, as the current market ofers lower valuation
level for long investment horizon and is an attractive
market for foreign portfolio investment due to high
potential of long term growth with improved regulatory
stance and increased institutional participation, the
market is expected to function more naturally than
before, thus reducing previous unprecedented volatility
and sagging confdence. In spite of this, no major upside
is expected regarding broad market index with lower
turnover level.
IDLC AT A GLANCE 2012
With the vision to become the best fnancial brand in
the country and aiming for Stakeholder Happiness,
IDLC started the year 2012 with a renewed sense of
energy, innovation and quality growth by unveiling its
new logo and brand pay-of line in March 2012.
The new core banking system, Oracle Flexcube Universal
Banking Solution (FCUBS), became operational in
January 2012, and enabled IDLC to create a number
of satellite systems to further enhance operational
ef ciency and MIS generation. Moreover, we are
increasingly focusing on Green Computing with the
objective of capacity maximization, cost ef ciency, and
reduction of our carbon footprint.
Moreover, as part of strategic human resource
management, IDLC aims to ensure an open work
environment, focusing on non-discrimination and
diversity in all phases of recruitment and evaluation.
In 2012, a total of 119 were recruited across the Group.
Extensive training programs were ofered for both
personal and professional development of employees,
total investment in training being BDT 20.59 Million in
2012. One of the most signifcant initiatives of IDLC was
the introduction of Ladies Forum, to better understand
and address various issues faced by the female
workforce across the organization.
With growing focus on Corporate Social Responsibility
(CSR) and Sustainable business practices, the year
2012 saw some major activities aimed at better
environmental management, awareness creation,
reduction of IDLCs carbon footprint, and community
development initiatives combining long-term
measures, focusing mostly on skills development of the
underprivileged, and a range of philanthropic activities.
Moreover, IDLC also was the frst and only organization
in the banking and fnancial sector of Bangladesh to
publish an Annual Sustainability Report in 2012.
WHAT WE STATE
Annual Report 2012
94
FINANCIAL PERFORMANCE IN 2012
The following table summarizes consolidated fnancial
performance of the IDLC Group in 2012:
Amount in BDT Million
Particulars
2012
(Actual)
2012
(Budget)
Achievement
Operating Income 2,403 2,465 97%
Operating expense 1,058 998 106%
Total Operating proft 1,345 1,468 92%
Proft before income tax 1,252 1,393 90%
Net proft after income tax 713 801 89%
Earnings per share 5.76 6.47 89%
A business-wise breakdown of the above performance is
given below:
Particulars
2012
(Actual)
2012
(Budget)
Achievement
Operating proft from core
fnancing business 1,162 1,102 105%
Income from investment in
shares 42 120 35%
Net proft after income tax
of IDLC Finance Ltd. 589 621 95%
of IDLC Securities Ltd. 81 44 184%
of IDLC Investments Ltd. 43 136 32%
CORPORATE DIVISION
Corporate Division at IDLC comprises of Corporate
Finance and Structured Finance units. This Division
is well reputed for its professional pool of resources
having extensive industry knowledge, expertise and
experience in structuring and ofering a range of
fnancial solutions, suiting unique requirements of both
local and multinational corporate houses from various
industries in Bangladesh.
CORPORATE FINANCE UNIT
In 2012, the Corporate Finance unit shifted its focus to
more credit-worthy clients and assets, thus signifcantly
growing its assets and fee earnings in 2012 despite
sluggish growth in various industries caused by lack
of adequate power and infrastructure facilities and
continuing liquidity crunch in the money market.
The following graph shows yearly disbursement of
Corporate Finance unit in 2012:
STRUCTURED FINANCE UNIT
With a revived Structured Finance Team, IDLC has
undertaken some prestigious syndication deals in the
year 2012. Given the importance of fee-based income,
coupled with benefts of IDLCs branding in the local
fnancial market through the Structured Finance
business, the management is positive on aggressively
growing this business and thus establishing itself as
one of the major players in the Syndication market of
Bangladesh.
The following table summarizes the performance
highlights of Structured Finance unit in 2012:
Amounts in BDT Million
Particulars 2012 2011
Achievement
over the year
Portfolio Size
(cumulative fund
raising) 25,824 19,569 31.96%
Total Fund Raised
(Year wise) 4,530 8,625 (47.47%)
Total fee income
earned (Year wise) 30.62 2.64 11.59 times
WHAT WE STATE
Annual Report 2012
95
MAJOR SYNDICATION DEALS IN 2012
In 2012, IDLC and IDCOL (Industrial Development
Company Limited) had jointly arranged BDT 2,280
Million and USD 30 Million for ECPV Chittagong Limited
for establishing a 108 MW IPP power plant project
in Chittagong, The project was jointly sponsored by
Energypac and Confdence Group.
In addition, IDLC also signed agreements for the
following syndication deals, fund-raising for which is
currently in process:
Lead Arranger for syndicated debt facility of BDT
5,596.60 Million for Le Meridien Dhaka, a fve-star
hotel project of Best Holdings Limited. The upscale
fve-star hotel, having 306 spacious guest rooms, will
be under the management of Starwood Hotel and
Resorts Worldwide;
Joint Arranger for syndicated debt facility of USD
109.73 Million, together with The City Bank Limited
and Standard Chartered Bank, for BSRM Group.
The amount, to be raised in both local and foreign
currencies, will be used for the new steel melting
and billet casting plant with a capacity of 0.86
Million per annum;
In addition to raising funds for the above two project,
Structured Finance unit will look for more syndication
deals from various sectors in 2013, while focusing
on diversifed product oferings like bond issuance,
securitization and advisory services for the reputed
corporate houses. Recently, an agreement was
signed with Waste to Resource Fund (W2RF) Limited
to provide fnancial advisory services for design,
monitoring and evaluation of investments in solid waste
management projects, reducing GHG emission, across
Asia and Africa.
Moreover, possible collaboration opportunities for
multilateral fnanciers, foreign lenders and investors will
also be explored to ofer foreign-currency fnancing for
syndication projects and corporate credits.
In addition, full-fedged Agency services for the
syndication deals, and Trustee services will also be
launched soon.
FUTURE OUTLOOK
With a larger team and enhanced capabilities and
expertise, the Corporate Division of IDLC looks
forward to future growth and proftability with a
renewed confdence. Our near term objectives include
formulation of a strong marketing team, identifcation of
thrust sectors and exploration of emerging businesses,
greater client coverage, and more focus on large-ticket
fnancing to credit-worthy clients.
In 2013, investments in power sector and infrastructure
projects, and Green Financing are expected to continue
growing, while collaboration with multilateral agencies
for Project Financing may become more prominent.
Moreover, to lower cost of funds and access greater
liquidity, we will focus on exploring foreign fnancing
opportunities and enhancing co-fnancing by
international fnanciers.
SME DIVISION
Small and Medium Enterprises (SME) are the key drivers
of any economy, while narrowing income inequality
and supporting poverty alleviation. Researches
estimate presence of approximately six million SMEs in
Bangladesh, making up 75% of the domestic economy,
while accounting for 80% of industrial employment
and 25% of the total workforce. With continuous
development of business models and services
approaches, the total SME portfolio in Bangladesh stood
at USD 11.60 Billion in June 2012, registering a year-on-
year growth of 28.4 percent.
Under this milieu, IDLC initiated SME fnancing back in
2006, and is now among the top fve fnancial service
providers to small businesses in Bangladesh. Today it
comprises more than 33 percent of the total customer
lending of the IDLC Group through products such as
Lease fnancing, Term Loan fnancing, Working Capital
fnancing, Project fnancing and Supplier Finance
facilities while being one of the largest participants
in the SME refnancing programs of Bangladesh Bank.
We are also committed to development of women
entrepreneurs across the country by extending Women
Entrepreneur Loan (WEL) at favorable terms and
WHAT WE STATE
Annual Report 2012
96
conditions, in line with the Central Banks guidelines.
Besides Small Enterprise Finance (SEF), our Medium
Enterprise Finance (MEF) strategically focuses on
entrepreneurs who have crossed the threshold of small
business and are aiming to emerge as future corporate,
with various fnancing facilities.
At the end of 2012, total number of live customers of
SME Department stood at 5,222, growing by over 50%
compared to 2011. Disbursement rose by 41.23 percent
to BDT 7,285 Million and total assets increased by 47.65
percent to BDT 10,085 Million. The following charts
show year-on-year growth of both disbursement and
total assets of SME Department.
In 2012, SME launched two new products:
SME SACHAL Loan, a facility for small and medium
sized trading, manufacturing, service, agriculture,
non-farm and agro-based industries etc.; and
Revolving Short Term Loan, a facility for fnancing
comparatively larger SMEs in trading, manufacturing
and service ventures to meet their working capital
requirement, especially to help entrepreneurs meet
their short-term cash fow needs.
Being committed to continuous development, IDLCs
SME Department became a member of Small Business
Banking Network (SBBN), a Chicago-based global-
industry building initiative and community platform
across emerging economies, strengthening fnancial
institutions to signifcantly scale up their services
to small businesses. The SME-SEF has also put itself
through the Small Business Banking Diagnostic to
evaluate its operations and performances against global
benchmarks, earning impressive grades in the 35-point
evaluation scale.
We are also increasing our share of various refnancing
windows including ADB Fund, Bangladesh Bank Fund,
JICA Fund, Women Entrepreneurs and Agro Refnancing
facility, with BDT 1,192.58 Million of refnancing
received in 2012. IDLC, so far, is the highest fund
receiver, out of 30 participating banks and NBFIs, under
the JICA-assisted Financial Sector Project organized
by Bangladesh Bank Refnancing and Pre-Financing
Scheme in June 2012, with total refnancing amounting
to BDT 91.42 Million. Moreover, increasing focus were
given on Green and environment-friendly fnancing
prospects, by extending credit facilities for installation
of solar panels, biogas plants and waste recycling plants.
Throughout 2012, our SME Department faced some
major challenges that included:
Greater rate sensitivity of the customers, making it
more dif cult to attract good customers with sizable
fnancing requirements in the face of high cost of funds;
Narrowing spread due to higher cost of funds;
Increased competition; and
Power shortage severely hampering business of
the small and medium enterprises, especially the
manufacturers;
Despite these challenges, IDLC, with its faster turn-
around time, customer-friendly services and tailored
solutions, has established a strong footprint in the
SME hubs of the country, while maintaining a quality
portfolio amounting to BDT 10,000 Million by the end of
2012. We are also contributing to more than 50 percent
of total disbursements for SMEs made by the NBFI
sector.
FUTURE OUTLOOK
In addition to maintaining and growing a quality
portfolio, our SME Division eyes to bring a dynamic shift
in its business model in 2012, through measures such
as tweaking of the operational matrix, disseminating
Customer Value Proposition (CVP), initiating Credit
Scoring Model for credit assessment and crafting a new
model for monitoring and collection.
WHAT WE STATE
Annual Report 2012
97
CONSUMER DIVISION
As part of IDLCs diversifcation plan and to create an
alternative cheaper source of fund, IDLCs Consumer
Division started operations back in 1997, catering to
fnancial needs of retail clients. At present, Consumer
Division is IDLCs largest division in terms of customer
base and Fund under Management, ofering a diverse
range of Home Loans, Car Loans, Personal Loans and
Deposit Products to both individual and institutional
clients. With a strong presence across all major branches
and two dedicated Consumer Sales Centers in Dhaka,
and a sales team of 120 staf, total loan and deposit
portfolio of Consumer Division stood at BDT 31 Billion,
registering a growth of 26.8 percent over 2011.
CONSUMER LOAN PRODUCTS
The year 2012 presented a volatile market scenario for
Consumer Financing. Home Loan, the prime product
of IDLCs Consumer business, faced severe challenges
due to various restrictions, coupled with negative
industry growth caused by restricted access to fund
from banking channel, drop in apartment sales by
55%, increased Registration Cost, unavailability of gas
connection service, and withdrawal of income tax
rebate. On the other hand, the reconditioned car market
was also negatively afected due to high duties and
restrictions over banks not to extend fnance for more
than 30% of car price, eventually declining auto sales by
more than 60 percent.
Contrary to these situations, IDLCs Consumer Division
performed well. Assets grew by 16 percent to BDT 128
Million in 2012, and loan customers grew by 8 percent.
IDLC also launched RegistraLoan, the frst loan of its
kind in Bangladesh to facilitate apartment buyers meet
property registration cost. The ratio of Non-Performing
Loans (NPL) also dropped signifcantly by the end of
2012.
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98
The following graph shows breakdown of Consumer
Finance portfolio in 2012:
DEPOSIT PRODUCTS
Despite the volatile money market scenario, deposits
were successfully mobilized throughout the year at
acceptable interest rates, contributing to over 85
percent of IDLCs funding basket, thus keeping the
lending wheel on for the IDLC Group. To further reduce
cost of fund, we shifted focus from more rate sensitive
corporate clients to less rate sensitive individual ones,
mobilizing 85 percent of new deposits from household
segments and the remaining from corporate clients. The
year 2012 ended with a deposit portfolio of BDT 22.00
Billion, growing by 32.6 percent over last year, whereas
deposit customer base grew by 52 percent, owing
mainly to new branding initiatives, growing market
awareness about IDLC, larger sales force, new product
package and diversifed product mix, and superior
customer service.
The year 2012 ended with some major structural
changes in the Consumer Division to boost business
growth. Key business was divided into Branch Sales
and National Sales, with recruitment in both these
areas, while Products and Marketing department was
established to manage the portfolio, MIS, employee
performance, customer Relationship, promotional
activities, and stakeholder coordination.
Consumer Division also came up with new non-funded
fee income structure, while introducing new deposit
packages and loan product in 2012. CD emphasized
on employee training to familiarize them with the new
IT platform, FLEXCUBE, while arranging extensive
training and team-building activities for the sales
team. Employee Performance Management was also
successfully implemented to boost productivity by
introducing Key Performance Indicators (KPI) and Dash
Board.
Customer segmentation helped honor the most
loyal and high-value customers through a structured
customer relationship management, whereas new
branding initiatives, growing market awareness about
IDLC, larger sales force, superior customer service,
new and diversifed products, and most importantly,
efective sales campaign throughout the year, helped
boost deposit growth. Moreover, for better business and
visibility, IDLC also tied up with NAVANA and Hyundai,
adding value to its Car Loan Facility; signed MoU with
renowned real estate developers to extend hassle-free
Home Loans; and associated with some corporate
organizations with special loan and deposit packages
for their employees.
FUTURE OUTLOOK
Economic outlook suggests money market to remain
mostly liquid in 2013. Aggressive lending by banks is
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99
expected in 2012 from the second quarter onwards,
whereas political instability might adversely afect
business. In this backdrop, the key priorities of IDLC
in 2013 will be to further reduce cost of funds by
mobilizing more household deposits, and increase
home loan and car loan businesses, while ensuring
a quality portfolio. Special attention will be given
to better train, equip and develop our sales team to
contribute in business growth through superior client
service, and at the same time, increase our footsteps in
untapped areas having good business potential, aiming
sustainable business growth in future.
THE CLIENTELE GRADE IDLC AS SUPERLATIVE
The SME Division and Consumer Division have recently
carried out Net Promoter Score Survey, a customer
loyalty measurement survey, among a total of 4,550
clients. Net Promoter Score (NPS*) is a customer loyalty
metric developed by Fred Reichheld, Bain & Company
and Satmetrix and is regarded globally as a tool to
chalk out the companys portion of Promoters over its
Detractors. Against a global industry average of +24
for fnancial services, the SME-SEF has produced an
NPS of + 59 while the Liability and Asset segments of
the Consumer Division have respectively earned NPSs
of +61 and +56. To achieve its vision to be the best
fnancial brand in the country, IDLC will leverage the
confdence as well as insights derived from the survey
and will continue to use NPS as a measure of customer
experience with its products and services.
CAPITAL MARKET
IDLC continues to be one of the major players in the
Capital Market of Bangladesh through IDLC Investments
Limited (IDLCIL) and IDLC Securities Limited (IDLCSL)
the two wholly-owned subsidiaries of IDLC.
Both IDLCIL and IDLCSL are well reputed among
the local and international clients for their highly
professional and personalized ofers, quality client
services, high ethical standards, and strict compliance
with local rules and regulations. Key features
distinguishing them from their competitors include
better risk management capacity; ef cient trade
execution; reliable order management system; trade
services through multiple channels including call
centers, web, SMS and mobile application; online
customer order management through webs, emails,
SMS and call centers; a professional pool of human
resources; and service accessibility through a strong
branch network, together with IDLCs strong brand
value.
IDLC INVESTMENTS LIMITED
IDLC Investments Limited (IDLCIL) is one of the top
ranking merchant bankers of the country providing
quality investment banking and portfolio management
services to its local and NRB clients. Besides merchant
banking services, we encourage and uphold discipline
in investment through rigorous Buy-side Research
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100
conducted by our qualifed professionals. The research
coverage includes listed companies, sectors, and
economy of Bangladesh and our footprint has reached
the global arena through information hubs like
Bloomberg, along with frequent publications in the
local media and IDLC website.
Despite all the market vulnerabilities, IDLCIL registered
BDT 182.66 Million and BDT 74.4 Million as operating
revenue and expense respectively, while proft before
provision stood at BDT 85.95 Million in 2012.
However, market capitalization and turnover witnessed
signifcant drop during 2012, afecting our management
fees, transaction and settlement fees. Moreover, we
undertook certain strategies to control and monitor the
exposure of margin loan, and to bring down the limit of
margin loan exposure to minimize downfall risks.
Major achievements of IDLCIL in 2012 include:
Signing of two Issue Management agreements:
With Energypac Confdence Power Venture Limited,
a joint venture of Energypac Power Generation
Limited and Confdence Cement Limited, engaged
in power generation, distribution and maintenance
of power plants on BOO basis; and
With a 100% export oriented RMG concern
established by a group of renowned entrepreneurs;
Association with Brummers Frontier PE (Mauritius)
Limited to assist them in making long-term equity
investment in Popular Pharmaceuticals Limited,
one of the leading pharmaceutical companies in
Bangladesh;
Assistance to one of the largest FMCG (Fast Moving
Consumer Goods) companies in Bangladesh in
raising capital;
Completion of Issue Management of GBB Power
Limited, an Independent Power Producer (IPP) of
the country, raising BDT 820 Million from the capital
market;
Corporate advisory services to Nuvista Pharama
Limited, assisting them in raising capital internally
through rights share issuance.
Currently, IDLCIL is working as issue manager for
several proposed IPOs, while working in a number of
underwriting deals signed in 2012.
During the year of volatility and pessimism, secondary
market investors have severely afected the primary
market. As such, BSEC also took some conservative
measures to protect the interest of the small investors,
and was reluctant in pursuing IPOs with premium.
For these reasons, issue managers, including IDLCIL,
failed to proceed with many of the prospective issue
management deals. During the last quarter of 2012,
market participants became more enthusiastic about
newly listed stocks resulting in signifcant rise of the
stock prices over their ofer prices, while BSEC also
started approving IPOs with premium.
2012 was a challenging year for the fund managers as
the market was volatile and DSE General Index sufered
a fall of 20%. As such, the prime focus of IDLCIL was to
retain the client and protect their capital. In addition, we
concentrated more on capacity building, development
of product and value added services, training, investor
awareness programs, and more public relationships.
Besides MAXCAP, we also added three new products
-- Proft and Loss Account Services, Capital Protected
Scheme, and Portfolio Advisory Services under DPM.
These initiatives are expected to bring the desired
revenue in future and put us in a competitively
advantageous position.
FUTURE OUTLOOK
Volatility of the secondary market may hamper the
primary market;
Capital raising has emerged as a new source of
revenue of the issue management company;
2013 will give good opportunity for accumulation
for strategic investment;
Advisory Service for investors can open up new
avenue of product oferings;
Maintain leadership position in Investment Banking;
Assume the leading position in terms of our research
works;
Manage downside risks of Margin Loan; and
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101
Aggressive selling of DPM (Discretionary Portfolio
Management) services through sales and marketing
team.
IDLC SECURITIES LIMITED
IDLC Securities Limited (IDCLSL) ofers full-fedged
international standard brokerage services, such as
trade execution, custodial services and dealer account
operation, for both institutional and retails investors
from Bangladesh and abroad. It has seats with both
the Dhaka and Chittagong stock exchanges. Moreover,
as a Depository Participant (DP) of the Central
Depository Bangladesh Limited (CDBL), it also provides
services including opening and maintenance of BO
(Benefcial Owner) accounts; dematerialization and
re-materialization of shares; transfer and transmission
of securities; pledging, un-pledging and confscation
of securities; corporate events announcement enquiry;
and BO ISIN balances enquiry.
In 2012, IDLCSL secured fourth position in the Dhaka
Stock Exchange Limited in terms of turnover. Despite a
36% negative growth in trade volume and 20% negative
growth in the capital market index, IDLCSL registered
a net operating income of BDT 152 Million in 2012.
Extraordinary efort by the management to restructure
the company, in terms of branch operations, human
resource management and other operational costs, has
enabled IDLCSL to cope and adjust with the changing
market dynamics. In 2012, general and administrative
expenses decreased by 22% to BDT 148 Million from
BDT 189 Million in 2011. All these restructuring resulted
in an after tax proft of BDT 81 Million in 2012, showing
signifcant improved against an after tax loss of BDT
164 Million in 2011. Also total assets stood at BDT 1,170
Million at the end of 2012, registering a 6.75 percent
growth over last year.
During 2012, foreign trades showed signifcant results,
while 1,186 new accounts were opened during the year,
taking the total number of accounts to 8,984 at the
end of 2012, registering a 12% growth over last year.
Of these, over 96 percent are local individual clients,
while the rest are institutional, foreign and NRB clients.
Moreover, IDLCSL also created strategic alliance with AT
Capital and some other foreign fund managers.
FUTURE OUTLOOK
Demutualization of Stock Exchanges in 2013
is expected to increase the transparency and
accountability of stock exchange;
Entrance of new issues in the market will create
good investment opportunity for the investors;
More foreign investment is expected due to
undervaluation of securities and regulatory
liberalization of sell-side research;
The regulator is expected to release more IPO during
2013, 2014 and 2015 to meet up with the demand of
quality stocks in the capital market;
Flow of margin loan in capital market is expected to
be limited in the coming years due to a conservative
approach of the market participants; and
2013 might provide good opportunities for
accumulation for strategic investment.
TREASURY OPERATIONS
Though the market was marked by gradual and steady
move towards stability throughout 2012, control of
money supply in curbing infation somewhat kept the
liquidity scenario tumultuous and posed the following
key challenges on treasury:
Ensuring suf cient liquidity;
Maintaining minimum dependency on volatile call
money market, and
Containing cost of funds within tolerable limits.
Treasury performed excellent in meeting its funding
objectives in 2012 and further enhanced its liquidity
position. To ensure adequate liquidity in an adverse
market scenario, Treasury constantly monitored the
maturity of its payment and settlement obligations, and
asset growth demand, and accordingly came up with
well-poised plans to meet the liquidity requirements
from dependable funding avenues within desired time
buckets, which was supported mainly by a robust and
steady growth of customer deposit base.
While managing liquidity, Treasury continued its
focus on reducing reliance on costlier funds from
intermediaries, like conventional borrowing from the
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Annual Report 2012
102
commercial banks. In 2012, IDLC witnessed a major
stride in both frontiers: deposits contributed 83 percent
of IDLCs funding portfolio which was 79 percent in
earlier year, and bank borrowing stood only 5 percent
of total funding basket compared to 10 percent in the
previous year.
The following charts summarize a change in IDLCs
funding mix from 2011 to 2012, while showing
contribution of deposits in the total funding basket:
In addition to deposit mobilization, strong focus
was also laid on utilization of Bangladesh Banks (BB)
refnancing windows, participating mainly in Small
and Medium Enterprise (SME) Refnancing Schemes,
including Women Entrepreneur Fund, and Agro
Refnancing Scheme. In 2012, we received long-term
refnancing of BDT 1,190 Million, while outstanding
balance was BDT 2,540 Million, posting a year-on-year
growth of 51 percent, thus diversifying our funding
basket and signifcantly reducing asset-liability
mismatch.
FUTURE OUTLOOK
The cautious fscal and monetary policy adjustments
adopted by the Government in the course of 2012
had contributed to the restoration of macroeconomic
stability to some extent. In 2013, we expect
Government and Bangladesh Bank to maintain a
similar watchful approach. The signals emanating
from the last few months indicate that liquidity and
interest rate scenario of banking channel will largely
depend on Governments bank borrowing target as
well as Bangladesh Banks stance on money supply
and infation control. Nonetheless, performance of
the economy in 2013 will critically hinge on how the
political challenges facing Bangladesh at the moment
are addressed in the coming months. Any prolonged
uncertainty in this context will have serious implications
for the performance of the banking industry and the
economy.
Under these predicted constraints, we are planning to
greatly impel our deposit drive, channel funds from
of-shore lenders and enhance our participation in
Bangladesh Banks refnancing schemes to keep our
liquidity position comfortable at an optimum cost.
HUMAN CAPITAL
IDLC considers its human resources as its greatest asset,
and believes employee skills, knowledge, expertise
and professionalism to be the drivers in achieving the
companys goals and objectives. To establish the perfect
strategic HR, human resource management is part of
IDLCs strategic goals and objectives in order to improve
business performance and develop an organizational
culture that foster innovation, fexibility and competitive
advantage.
Being one of the leading NBFIs in Bangladesh, IDLC
has focused on establishing a dynamic HR process for
meeting its human resource needs. At IDLC, we aim to
employ the right people in the right places, develop
their capacities, manage their life cycle, and reward
them based on each individuals qualifcation, skills,
performance, contribution and responsibility. Based
on the current and future HR needs, IDLC either flls the
positions with internal candidates from its own talent
pool, or by recruiting competent and skilled people
through a transparent recruitment process. We aim
to ensure equal opportunities for all our employees,
regardless of their age, gender, race, religion, ethnicities,
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Annual Report 2012
103
physical attributes or marital status, while considering
meritocracy and performance as the most important
criteria of assessment during recruitment and
evaluation.
Moreover, IDLC encourages increased female
participation across the Group, maintaining gender
balance in the workforce. IDLC has recently introduced
Ladies Forum for all female members of the IDLC
Group, to ensure various issues and challenges faced
by women at work are all understood and properly
addressed.
We take all our eforts to encourage growth and
career development of the employees. An extensive
training need analysis has been conducted through
task analysis of new entrants and performance
analysis of the existing employees. IDLC provides its
employees extensive in-house, local and overseas
training opportunities to continuously upgrade their
skills, expertise and knowledge, and to better equip
them in meeting organizational needs and face future
challenges in the ever-changing fnancial sector of the
country. In 2012, total investment in training programs
amounted to BDT 20.59 Million. Moreover, IDLC also
ofers extensive internship opportunities to fresh
graduates from leading universities, to familiarize them
with corporate culture and work environment, while
developing their competitive skills for future jobs.
IDLC is well regarded for its high ethical standards and
statutory compliance, and has a set of Code of Ethics for
its employees. We also believe in an open environment
where people can appreciate efective internal
communications and free fow of ideas, creativity and
innovation, fairness, commitment, teamwork, and
the highest standards of professional excellence and
integrity.
IDLCs Human Resource Division envisages adoption of
appropriate human resource policies and practices to
develop its employees with a view to introducing superior
level of job satisfaction and to ensure their optimum
contribution towards achieving corporate goals.
More, IDLC is also launching a HR Management
software in 2013 for more ef cient management of
human resources. The implementation, taking place
in two phases, will emphasize on core issues including
Payroll Management, Employee Profles, Performance
Management and Training Management.
Details about our human resources are discussed in Our
Human Capital report at page No. 70.
INFORMATION TECHNOLOGY
Information & Communication technology (ICT) is fast
becoming indispensable for fnancial institutions in
ensuring smooth operation and providing ef cient
services. IDLC is one of the very few organizations in
Bangladesh to have recognized this need, and thus
embraced ICT as the key to achieving excellence
in various aspects of operations. Accordingly, the
Board and Management of IDLC have adopted a
comprehensive ICT Policy for the Group.
Over the past few years, IDLC has witnessed signifcant
growth in terms of business volume and customer
WHAT WE STATE
Annual Report 2012
IDLCFL IDLCSL IDLCIL Total
481 80 48 609
104
base, while diversifying its product and client portfolio.
However, this growth has also increased the risks and
challenges of doing business by manifold. Information
Technology (IT) being one of the key enablers of sound
business growth and risk management, the importance
of a robust, scalable and fexible IT platform is crucial for
an organization like IDLC.
Accordingly, our new core banking system, Oracle
Flexcube Universal Banking Solution (FCUBS), a banking
transaction processing engine from Oracle, became
operational in January 2012, the groundwork for which
had been completed in the previous year. To system
has enabled us to create a number of satellite systems
to further enhance our operational ef ciency and MIS
generation. We have just completed a year of smooth
and ef cient operation on this platform.
In 2013, we are taking our IT platform to a whole new
level. We have started a unifed communication project
to bring the people of dispersed branches closer,
enabling them to work in collaboration irrespective of
their physical presence.
Green computing is always the focus of the IDLC
Group, with the objective of capacity maximization,
cost ef ciency, and reducing our carbon footprint.
Our virtualization and server consolidation projects
have contributed to the environment by reducing
CO2 emission and power consumption by 116 tons
and 203,000 kWh respectively in 2012. Our video
conferencing facility, connecting major branches with
the Head Of ce, on an average saves 8.71 tons of CO2
emission per year from saved travels. In addition, we
are undertaking another technology project aiming to
reduce paper usage in the of ce, thus playing our part
for better environmental management.
MARKETING COMMUNICATIONS
IDLC unveiled its new logo and brand pay-of line
through a press conference in Dhaka on March 11, 2012.
At IDLC, our vision is to become the best fnancial brand
in the country. The new logo, with red and black as
predominant colors, will continue to reemphasize the
companys traditional strengths and strong reputation
for corporate governance, statutory compliance,
consistency, stability and proftability, while refecting a
sense of renewed energy, innovation and quality growth
through a modern outlook.
At IDLC, we aim for a more visionary target of
Stakeholder Happiness. The IDLC Groups over 950
staf members are committed to owning and living
this new message. This concept has now become our
guiding philosophy, one that will validate all our actions.
Therefore, our new logo includes our tagline Financing
Happiness. The logo has helped us to clearly and better
diferentiate IDLC from our peers and competitors.
In 2013, we plan to continue our marketing and
promotional activities to strongly establish our
image among our stakeholders as a responsible and
sustainable brand.
CSR AND SUSTAINABLE BUSINESS
IDLC is well regarded in the local fnancial market for
its corporate governance, ethical standards, and strict
compliance with rules and regulations of the country.
However, IDLC, in an efort to take this initiative a
step further, renewed its commitment to become a
responsible organization by focusing more on CSR
(Corporate Social Responsibility) initiatives, leading to
a sustainable business. To better develop its CSR plans,
IDLC became members with UN Global Compact, UN
Environment Programme Finance Initiative, and CSR
Centre of Bangladesh, in late 2010.
Our CSR commitment is based on four broad areas:
Human Rights, Labor, Environment and Anti-corruption.
Our very basic CSR starts with ensuring well-being
of our employees, the most important stakeholder
of IDLC. Non-discrimination, equal opportunity and
meritocracy are at the core of our human resource
management, while we are committed to both their
personal and professional development by investing in
various training programs all year round, suiting their
requirements. Moreover, our Board and Management
are committed to strike the balance between male and
female employees in our total workforce. Besides, IDLC
provides various facilities and benefts to ensure health
and safety of its employees, both in the workplace and
at home.
Our environmental commitment prioritizes not only
responsible environment practices, but also measures
to reduce our own carbon footprint. IDLC regularly
conducts tree plantation initiatives across various
locations, planting around 10,000 saplings till now in
phases. Recently IDLC has undertaken an environmental
WHAT WE STATE
Annual Report 2012
WHAT WE STATE
Annual Report 2012
campaign across diferent schools, creating awareness
among children regarding causes and impacts of
environmental pollution and wastage of resources,
while asking them to come up with feasible mitigation
measures. Moreover, IDLC sponsored a countrywide
campaign by Mr. Musa Ibrahim, carrying the message of
green education, responsible environmental practices
and importance of tree plantation, while planting 630
saplings in educational institutions visited. We also
targeted our deposit clients with this awareness by
distribution pot plants during World Environment Day.
Moreover, we are safeguarding our lending operations
more by addressing environmental and social issues
inherent to the projects. Besides, continuous adoption
and upgradation of environment-friendly technologies
across the organization is also one of the priorities of
our management in curbing our carbon footprint.
Our community empowerment activities are a
combination of long-term measures, primarily
focusing on skills development of the underprivileged,
and a wide range of philanthropic activities. IDLC
is recently working on a project to develop skills
of the underprivileged people, eyeing subsequent
employment in diferent RMG companies under IDLCs
client portfolio. We work together with SEID Trust,
LEADS and Shishu Bikash Chhaya in providing better
education and healthcare facilities to underprivileged
children, including those with physical and mental
disabilities. We arrange regular blood donation
programs in diferent branches, in participation
of our employees, clients and other stakeholders,
benefting Bangladesh Thalassaemia Hospital, and other
organizations. Moreover, IDLC regularly distributes
blankets and warm clothes among the marginal
population, in line with which around 5,000 blankets
and warm clothes were distributed this year as well in
various areas of North Bengal and Jessore.
Details about our CSR and sustainable business are
discussed in Corporate Social Responsibility (CSR) at
IDLC report in page No. 60.
FUTURE PROSPECTS
IDLC clearly defnes its strategy for growth and
proftability in 2013 and beyond, through major
operational initiatives in line with the Companys vision
to become the best fnancial brand of the country:
Increase diversity of the revenue streams beyond
traditional sources of income;
Major focus on lending/investing in green and
environment-friendly projects from diferent sectors;
Continuing focus on household deposits to reduce
cost of funds and ensure liquidity for lending
operations;
Greater collaboration with multilateral fnanciers and
foreign lenders to ofer low cost fnancing options to
clients;
Intensive customer and investor awareness
programs;
Ensuring faster, better and uniform customer service
across all branches;
Using ICT as a tool for improved operational
ef ciency, while focusing on green computing for
capacity maximization, cost minimization, and
reduction of carbon footprint;
Continuing eforts to increase market visibility
through marketing and communication initiatives;
and
Higher focus on innovative CSR and sustainable
business solution, contributing to better
environmental and community development, while
emerging as a responsible and sustainable brand.
Achievement of the IDLC Group so far is the refection of
exceptional commitment and eforts by each and every
member of our workforce. I sincerely thank this team for
their energy, eforts, commitment, and extraordinary
teamwork.
My sincere note of gratitude also goes out to our
distinguished Chairman and honorable members of the
Board of Directors for their continuing commitment to
the higher corporate governance and ethical standards,
and their guidance to and empowerment of the
Management team of IDLC.
Selim R. F. Hussain
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WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
Directors Report to the Shareholders
DEAR SHAREHOLDERS,
The Board of Directors of IDLC Finance
Limited is pleased to present the audited
fnancial statements of the Company
for the year ended December 31,
2012; Auditors Report, along with the
IDLC Groups performance; and other
issues in regard to the Companies Act,
1994, Guidelines issued by Bangladesh
Securities and Exchange Commission
(BSEC) and Bangladesh Bank, and
Bangladesh Accounting and Financial
Reporting Standards.
BANGLADESH ECONOMY
Despite global economic downturn, GDP
growth of Bangladesh stood at 6.3 percent
in 2012. Overall infation came down,
caused mainly by a drastic reduction in
food price. Whereas export registered a
growth of 7.01 percent in 2012, import
came down through strict monitoring and
controlling of non-essential import items.
However, industries witnessed a robust
growth of 9.5 percent in 2012, boosted
mainly by construction and small-scale
manufacturing for the domestic market.
Industrial term loan disbursement rose
to BDT 97.20 Billion, whereas import
of industrial raw materials and capital
machineries also increased. On the other
hand, agricultural growth slowed down to
only 2.5 percent caused mainly by higher
In spite of the global crisis, afecting the economy of Bangladesh, and the
bearish treads in the capital market, IDLC performed impressively throughout
2012 across various business segments and support units...
Anwarul Huq
Chairman
107
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
production costs due to increasing prices of fertilizer,
power and fuel.
Remittance increased signifcantly in 2012, and coupled
with higher export earnings, this boosted the foreign
currency reserve to USD 12,750.58 Million.
Continuing restrictive monetary policies, rising interest
rates, liquidity crunch, currency devaluation and rising
infation signaled a prolonging bearish trend from the
very beginning of 2012 as well. Market capitalization
stood at BDT 2,385.24 Billion, while turnover declined
by 36.86 percent compared to 2011, reducing market
liquidity and hindering secondary market performance.
However, the primary market got some respite after
listing of 14 IPOs at DSE and declaration of a 20 percent
provision by Bangladesh Securities and Exchange
Commission (BSEC) in most of these IPOs.
IDLCS PERFORMANCE IN 2012
IDLC Finance Limited commenced its journey in 1985
as the frst leasing company in the country. With its
pioneering role, IDLC has made the lease fnancing
popular in the country. Over the 26 years operation in
Bangladesh, IDLC has diversifed its business operation
and become the largest multi-product Non-Bank
Financial Institution of Bangladesh, with almost equal
focus in Corporate, Retail and SME sectors, while
expanding its capital market services.
In spite of the global crisis, afecting the economy
of Bangladesh, and the bearish treads in the capital
market, IDLC performed impressively throughout 2012
across various business segments and support units.
The Corporate Finance unit increased its disbursement
by 18 percent to BDT 4,666 Million in 2012, while total
portfolio reached BDT 7,830 Million. With aggressive
growth approach of the Structured Finance unit, fee-
based income increased by 11.59 times in 2012. IDLC
also signed some major deals, either as Lead Arranger
or Joint Arranger for syndicated fund-raising, or as
Financial Advisor, in a wide range of infrastructure and
environment-friendly projects.
SME, one of the fastest growing business units of IDLC
with its fast turnaround time, customer-friendly services
and tailored solutions, disbursed BDT 7,285 Million in
2012, registering a growth of 36 percent over 2011.
Total receipt of refnancing amounted to BDT 1,192.58
Million, making IDLC one of the largest participants
in the refnancing programs of Bangladesh Bank and
other fund providers. Disbursement under Women
Entrepreneur Loan facility stood at BDT 337 Million.
Moreover, IDLC launched two new SME products,
and became member of the Small Business Banking
Network (SBBN), an initiative to strengthen fnancial
108
institutions to signifcantly scale up their services to
small businesses in emerging economies.
Consumer, the largest division of IDLC in terms of
customer base and Fund under Management, increased
its loan and deposit portfolio to BDT 31 Billion in 2012,
registering a 26.8 percent growth over last year. Focus
was shifted from more rate sensitive corporate clients to
less rate sensitive individual ones in mobilizing deposits,
while increasing deposit customer base by 52 percent
in 2012. Throughout the year, Consumer Division went
through some major structural changes, introduced
new products, developed a new non-funded fee income
structure, provided extensive training to its employees,
and tied up with renowned market players to add value
to its Home Loan and Car Loan facilities, as well as gain
better market visibility.
Despite all market vulnerabilities, both IDLC Investments
Limited (IDLCIL) and IDLC Securities Limited (IDLCSL),
two wholly-owned subsidiaries of IDLC operating in the
capital market, showed impressive performance. IDLCIL
earned operating revenue of BDT 182.66 Million, while
proft before provision stood at BDT 85.95 Million in
2012. Strategies were undertaken to monitor and control
margin loan exposure, while focus was on retention of
clients and protecting their capital, capacity building of
the workforce, and increased investor awareness. Three
new products were also launched in 2012.
On the other hand, IDLCSL registered a net operating
income of BDT 152 Million in 2012, and an after-
tax proft of BDT 81 Million. 1,186 new accounts
were opened, while MIS was introduced for better
performance management.
IDLCs Treasury showed remarkable performance in
both enhancing liquidity position and keeping cost of
funds at reasonable level. To avert liquidity risk, IDLC
strategized well-poised plans to meet the liquidity
requirements from dependable funding avenues, which
were supported mainly by a robust and steady growth
of customer deposit base. Customer deposit basket
increased signifcantly to contribute 83 percent of our
total funding requirements at relatively lower costs,
while dependence on costly bank borrowings were
gradually reduced in 2012. Also, strong focus was laid on
utilization of refnancing facilities of Bangladesh Bank to
contain the cost of fund.
The consolidated performance of the Group in 2012 has
been summarized below:
Particulars
IDLC Group
2012 2011
Growth
%
Net interest income 1,751 1,578 11%
Total operating income 2,403 2,160 11%
Total operating expenses 1,058 913 16%
Proft before provisions 1,345 1,246 8%
Provision for loans/
investments 93 30 210%
Proft before taxes 1,252 1,217 3%
Provision for taxes 539 716 -25%
Net proft after taxation 713 500 43%
Both net interest income and operating income of the
Group saw a growth of 11% during 2012 compared to
previous year. Total operating expenses witnessed a
growth of 16% mainly due to charging of amortization
cost of new core banking system, Oracle Flexcube
Universal banking Solution which became operational
from January 2012. Moreover, during the year we
have recruited 119 new employees, conducted several
training sessions for the capacity building of the
employees which have increased cost, but results will
come in future. Proft before provision increased by on
8% as against 11% increased in operating income was
mainly due to higher increase of operating expenses.
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
109
In 2012, our incremental provision amount was
considerable compared to previous year. A portion
of incremental provision (general provision) was due
to huge increase of our portfolio. The other portion
(specifc provision) was because of some account
deteriorations. Some clients sufered because of
new regulatory policies, while some other sufered
because of cash fow crisis in their businesses. We kept
some additional provisions against these accounts on
subjective basis perceiving further deteriorations. Due
to substantial increase in provision proft before tax
grew by only 3%.
In 2011, IDLC Securities limited was required to keep
higher provision for taxes due to changes in tax law
by the Finance Act 2011. Moreover, during 2012 some
pending tax assessment had been settled giving some
substantial relief in our favor for which full provision was
made in the accounts.
Year 2012 saw a substantial reduction in provision
for taxes due to the reasons explained above which
resulted in substantial increase in net proft.
Details segment and product wise performance analysis
and future outlook of the business as well as industry
are discussed in the CEO & Managing Directors Review
of Economic Environment and business Performance at
page No. 88.
The new core banking system, Oracle Flexcube Universal
Banking Solution (FCUBS), also contributed signifcantly
in enhancing operational ef ciency and MIS generation
throughout the Group. With continuing focus on
strategic human resource management, extensive
investments were made in employee training programs,
and employee health and safety issues, while ensuring
an environment free of all discrimination.
A number of major initiatives were also undertaken in
the areas of environmental management, awareness
creation, and community empowerment, mostly
through long-term skills development projects and
various philanthropic activities, in line with IDLCs
growing commitment to CSR (Corporate Social
Responsibility) and Sustainable Business.
Quarterly disclosed fnancial performance and the
year 2012 fnancial performance:
As required by law the company is required to publish
the fnancial performance of 1st, 2nd and 3rd quarters.
The quarterly fnancial performance and the yearly
performance are shown in the following table:
Quarterly Performance - IDLC Finance Limited
Particulars
2012
Q1 Q2 Q3
Year
2012
Net interest income 414 381 416 1,624
Total operating income 446 517 485 1,955
Total operating
expenses 177 189 229 822
Proft before provisions 269 328 255 1,133
investments 6 54 23 101
Proft before taxes 263 273 232 1,033
Provision for taxes 82 168 104 443
Net proft after taxation 181 105 128 589
Quarterly Performance - IDLC Group
Particulars
2012
Q1 Q2 Q3 Year
2012
Net interest income 473 409 453 1,751
Total operating income 569 628 626 2,403
Total operating
expenses 230 244 299 1,058
Proft before provisions 338 384 327 1,345
investments 17 - 28 93
Proft before taxes 322 384 299 1,252
Provision for taxes 110 206 128 539
Net proft after taxation 211 178 171 713
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
Trend in NPL
3.97
3.43
2.84
2.32
2.09
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2008 2009 2010 2011 2012
110
The above table depicts that there is no signifcant
deviations in the fnancial performance of the company
between the quarterly fnancial performances and
the annual fnancial results. Some diferences in proft
in 2nd and 3rd quarter were due to changes in the
provision requirement for loans and leases and changes
in market price of investments in shares.
CONTRIBUTION TO THE ECONOMY OF BANGLADESH
IDLC aspires to be one of the major contributors
in the economy of Bangladesh, mainly through its
contribution to the National Exchequer, as well as
through creation of jobs.
In 2012, IDLC deposited BDT 404 Million to the
Government Exchequer as Corporate Income Tax of the
Company. Also BDT 287.73 Million was collected and
deposited to the Government Exchequer as withholding
tax and VAT.
Moreover, a total of 119 people were recruited in
diferent positions across the Group.
RISK MANAGEMENT
In todays competitive market scenario, a company
having the ability to take strategic initiatives within a
pre-defned and consistent risk framework is better
poised to ensure Safety and Security for all its
stakeholders, while being easily distinguishable from
its competitors. Recognizing this, maintenance of a
well-structured and strong risk management framework
through continuous improvement is critical to IDLCs
strategy for efective management of the company.
IDLC has diferent committees for risk management.
The Credit Evaluation Committee (CEC) and Asset
and Liability Committee (ALCO), comprised of IDLCs
senior management, regularly review issues related
to the market, credit and liquidity, and accordingly
recommend and implement appropriate measures
to address and mitigate associated risks. IDLC has
an approved Asset Liability Management (ALM)
Policy, under responsibility of the ALCO, and a robust
ALM software and dedicated ALM desk to generate
necessary MIS for decision-making by ALCO. The Credit
Risk Management (CRM) Department independently
scrutinizes projects from a risk-weighted point of view
and assists relevant departments in setting business
development priorities in line with IDLCs risk appetite,
while optimizing the risk-return trade of derived from
the relevant risk exposure. CRM team clearly defnes
exceptionally high-risk sectors and prohibited lending
types that the company does not entertain under any
circumstances, due to high involvement of negative
environmental, social or ethical considerations of such
projects.
At individual exposure level, a Risk Grading Model
(RGM) is used to promote safety and soundness of the
company by facilitating informed decision-making.
At portfolio level, the company tracks the quality of
the loan by analyzing risk migration and trends in the
non-performing ratios of diferent lending portfolios on
a regular basis. Such indicators prompt timely decision-
making by the relevant risk management committees in
preserving the quality of the loans and advances.
IDLCs Credit Administration Department (CAD) and
Internal Control and Compliances (ICC) Department
are responsible for assessing operational risks across
the company as a whole and ensuring an appropriate
framework to identify, assess and manage operational
risks.
IDLC has also established a Basel Implementation
Unit (BIU), responsible for implementing Capital
Adequacy and Market Discipline (CAMD) instructions of
Bangladesh Bank across the company, and managing
risk-based capital adequacy. The Basel Implementation
Desk (BID) of CRM Department specifcally carries out
the risk-based capital analysis and places it to the BIU
along with recommendations to facilitate decision-
making for maintaining minimum/regulatory capital
and managing related risks.
Details about our risk management are discussed in
Statement of Risk management report at page No. 28.
CORPORATE AND FINANCIAL REPORTING
FRAMEWORK
The Directors of IDLC, in conformance to BSEC
Notifcation No. SEC/CMRRCD/2006-158/134/Admin/44
dated August 7, 2012, confrm compliance with the
fnancial reporting framework for the following:
The fnancial statements, prepared by the
management of IDLC, make a fair presentation of its
activities, operational details and results, cash fow
information, and changes in equity structure;
Proper books and accounts of the company have
been maintained;
Appropriate accounting policies, including
International Accounting Standards (IAS)/,
Bangladesh Accounting Standards (BAS) /
International Financial Reporting Standards (IFRS) /
Bangladesh Financial Reporting Standards (BFRS),
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
111
as applicable in Bangladesh, have been consistently
applied in preparation of the fnancial statements.
Any change or deviation has been adequately
disclosed;
Accounting estimates are based on reasonable and
prudent judgment;
Internal control process has been properly designed
and efectively implemented and monitored;
No signifcant doubt exists upon the Companys
ability to continue as a going concern.
KEY OPERATIONAL AND FINANCIAL INFORMATION
Key Operational and Financial Information over the last
fve years, as per requirement of SEC/CMRRCD/2006-
158/134/Admin/44 dated August 7, 2012, has been
presented at page No. 82.
Highlights of overall operation of the Company as per
DFIM circular No. 11 dated December 23, 2009 have also
been presented at page No. 86.
RELATED PARTY TRANSACTIONS
Disclosure of all Related Party Transactions, including
basis for such transactions, has been provided in Note
37 at page No. 199.
SHAREHOLDING PATTERN
The shareholding pattern of IDLC, as of December
31, 2012, is disclosed as per revised CGG of BSEC in
Annexure-I of this report at page No. 112.
BOARD MEETINGS AND ATTENDANCE BY THE
DIRECTORS
During the year ended on December 31, 2012, a total
of eleven (11) Board Meetings were held. Attendance
by the Directors and remuneration to the Directors has
been summarized in Annexure-II of this report at page
No. 113.
PROPOSED DIVIDEND
The Board proposed stock dividend @ 30% for the year
2012.
DIRECTORS
As per Article- 116 of the Articles of Association of
the Company, the following Directors will retire from
the of ce of the Company in the 28
th
Annual General
Meeting:
Mr. Rubel Aziz, nominated by The City Bank Limited;
Mr. Aziz Al Kaiser, nominated by The City Bank Limited;
Mr. K. Mahmood Sattar, nominated by
The City Bank Limited; and
Mr. Farooq Sobhan, Independent Director
However, they are also eligible for reelection.
Moreover, the Board at its 201
st
meeting held on
February 14, 2013 appointed Mr. Syed Abu Naser
Bukhtear Ahmed as an Independent Director as
required by BSEC. The appointment of Mr. Ahmed is also
required to be approved by the shareholders.
AUDITORS
In 27
th
Annual General Meeting, shareholders appointed
Hoda Vasi Chowdhury & Co., Chartered Accountants,
as the auditors of the Company for the year 2012
until the conclusion of 28
th
at a remuneration of Tk. 400,000. Being eligible for
re-appointment, the existing auditors, Hoda Vasi
Chowdhury & Co., Chartered Accountants, ofered
themselves for re-appointment. As proposed by the
Audit Committee ,the Board recommends Hoda Vasi
Chowdhury & Co., Chartered Accountants , for further
appointment as the auditor of the company until
completion of the next Annual General Meeting.
STATUS OF COMPLIANCE
Status of compliance with the conditions imposed by
the Bangladesh Securities and Exchange Commissions
Notifcation No. SEC/CMRRCD/2006-158/134/Admin/44,
dated August 7, 2012, along with a certifcate from a
practicing Chartered Accountant have been enclosed as
Annexure-III at page No. 114.
We also enclose a statement of compliance on the good
governance guideline issued by the Bangladesh Bank as
Annexure-IV at page No. 124.
On behalf of the Board of Directors,
Anwarul Huq
Chairman
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
112
Annexure-I
Pattern of Shareholdings on December 31, 2012 as required by the revised Corporate Governance Guideline issued
by BSEC
Particulars
No. of Share
holding
% of Total
shares of
IDLC
Remarks
Shares Held by :
Subsidiaries and other related parties Nil
Directors, their spouses and minor children* Nil
Chief Executive Ofcer (CEO) and his spouse and minor children Nil
Chief Financial Ofcer (CFO) and his spouse and minor children Nil
Company Secretary (CS) and his spouse and minor children Nil
Head of Internal control and Compliance (HICC) and his spouse
and minor children 412 0.00033
Executives (Top ve person other than CEO, CFO, CS, HICC):
1. M. Jamal Uddin Nil
2. Asif Saad Bin Shams Nil
3. Mir Tariquzzaman Nil
4. Bilquis Jahan 1,750 0.0014
5. Zahid Ibne Hai Nil
Shareholders holding 10% or more voting right:
The City Bank Limited 35,103,537 28.37
Transcom Group 16,499,912 13.33
Total 51,603,449 41.70
*All the Directors except Independent Directors, are Directors nominated by institutions and they do not hold any
share in their personal name.
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
113
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WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
Certicate on compliance of conditions of corporate governance guidelines to
The shareholders of IDLC Finance Limited
We have examined the compliance of conditions of corporate governance guidelines of the Bangladesh
Securities and Exchange Commission (BSEC) by IDLC Finance Limited (the Company) as stipulated
in clause 7(i) of the BSEC notication no SEC/CMRRCD/2006-158/134/Admin/44 dated 7 August
2012.
The compliance of conditions of corporate governance guidelines as stated in the aforesaid notication
and reporting of the status of compliance is the responsibility of the Companys management. Our
examination for the purpose of issuing this certication was limited to the checking of procedures and
implementations thereof, adopted by the Company for ensuring the compliance of conditions of corporate
governance and correct reporting of compliance status on the attached statement on the basis of evidence
gathered and representation received.
To the best of our information and according to the explanations given to us, we certify that, except as
reported on the attached status of compliance statement, the Company has complied with the conditions
of corporate governance stipulated in the above mentioned BSEC notication dated 7 August 2012.

Manzoor Alam, FCA
Senior Partner
ICAB Enrolment Number 132
For Hoda Vasi Chowdhury & Co
Dhaka, 20 February 2013
Annexure-III
115
WHAT WE STATE
Annual Report 2012
Status of Compliance with the Corporate
Governance Guidelines (CGG)
Status of compliance with the conditions imposed by the Notifcation No. SEC/CMRRCD/2006-158/134/
Admin/44 dated August 07, 2012 of Bangladesh Securities and Exchange Commission (BSEC) issued under
section 2CC of the Securities and Exchange Ordinance 1969:
(Report under Condition No. 7.00)
Condition
No.
Title
Compliance Status as
on December 31, 2012
Remarks
Complied
Not
Complied
1.1 Boards Size:
The number of the Board members of
the Company shall not be less than 5
(fve) and more than 20 (twenty)
The number of Board members of the
Company is eleven (11) as prescribed
by the Bangladesh Bank.
1.2 Independent Directors
1.2(i) At least one ffth (1/5) of the total
number of directors in the Companys
Board shall be Independent Directors
The Board at its 201
st
meeting held on
February 14, 2013 appointed another
Independent Director to make total
number of Independent Directors
1/5th of total directors
1.2(ii)(a) Who either does not hold share in the
company or holds less than one (1%)
shares of the total paid up shares of the
company
None of the Independent Directors
hold any share of the company
1.2(ii)(b) Who is not sponsor of the Company and
is not connected with any sponsor or
director or shareholder who holds one
percent or more shares of the Company
1.2(ii)(c) Who does not have any other

relationship, whether pecuniary or
otherwise,
with the company or its subsidiary/
associated companies
1.2(ii)(d) Who is not a member, director or of cer

of any stock exchange;
1.2(ii)(e) Who is not a shareholder, director

or of cer of any member of stock
exchange or an intermediary of the
capital market;
1.2(ii)(f ) Who is not a partner or an executive

or was not a partner or an executive
during the preceding 3 (three) years
of the concerned companys statutory
audit frm;
DIRECTORS REPORT
116
WHAT WE STATE
Annual Report 2012
Condition
No.
Title
Remarks
Complied
Not
Complied
1.2(ii)(g) Who shall not be an independent
director in more than 3 (three) listed
companies;
1.2(ii)(h) Who has not been convicted by a court

of competent jurisdiction as a defaulter
in payment of any loan to a bank or a
Non-Bank Financial Institution (NBFI);
1.2(ii)(i) Who has not been convicted for a criminal

ofence involving moral turpitude.
1.2(iii) Independent Director(s) shall be

appointed by the Board of Directors and
approved by the Shareholders in the
Annual General Meeting (AGM);
Appointment of Independent
Directors will be placed in the
28
th
Annual General Meeting for
shareholders approval.
1.2(iv) The post of independent director(s)
cannot remain vacant for more than 90
(ninety) days.
No such vacancy created

1.2(v) The Board shall lay down a code of
conduct of all Board members and
annual compliance of the code to be
recorded.
st
meeting held on
February 14, 2013 approved the Code
Conduct of all Board Members and
recorded its annual compliance.
1.2(vi) The tenure of of ce of an independent
director shall be for a period of 3 (three)
years, which may be extended for 1
(one) term only.
1.3 Qualifcation of Independent Director (ID)

1.3(i) Independent Director shall be a
knowledgeable individual with integrity
who is able to ensure compliance with
fnancial, regulatory and corporate laws
and can make meaningful contribution
to business.
1.3(ii) The person should be a Business

Leader/Corporate Leader/Bureaucrat/
University Teacher with Economics or
Business Studies or Law background/
Professionals like Chartered
Accountants, Cost & Management
Accountants, Chartered Secretaries.
The independent director must have
at least 12 (twelve) years of corporate
management/professional experiences.
1.3(iii) In special cases the above qualifcations

may be relaxed subject to prior approval
of the Commission.
No such deviation occurred
DIRECTORS REPORT
117
WHAT WE STATE
Annual Report 2012
Condition
No.
Title
Remarks
Complied
Not
Complied
1.4 Chairman of the Board and Chief
Executive Of cer:
The positions of the Chairman of the
Board and the Chief Executive Of cer
of the companies shall be flled by
diferent individuals. The Chairman of the
company shall be elected from among
the directors of the company. The Board
of Directors shall clearly defne respective
roles and responsibilities of the Chairman
and the Chief Executive Of cer.
In compliance with the revised CGG,
the Board at its 201
st
meeting held on
February 14, 2013 defned the roles
and responsibilities of the Chairman
and the CEO & managing Director.
1.5 Directors Report to Shareholders shall include following additional statements on:
1.5(i) Industry outlook and possible future
developments in the industry
Refer to the Directors Report at
page No. 106.
1.5(ii) Segment-wise or product-wise
performance
page No. 107
1.5(iii) Risks and concerns Refer to the Directors Report at
page No. 110.
1.5(iv) Discussion on Cost of Goods sold, Gross
Proft Margin and Net Proft Margin
page No. 108.
1.5(v) Discussion on continuity of any Extra-
Ordinary gain or loss
No such item exists
1.5(vi) Statement of all related party
transactions
page No. 111.
1.5(vii) Utilization of proceeds from public
issues, rights issues and/or through any
others instruments
No such item exists
1.5(viii) An explanation if the fnancial results
deteriorate after the company goes
for Initial Public Ofering (IPO), Repeat
Public Ofering (RPO), Rights Ofer,
Direct Listing, etc.
No such events occurred
1.5(ix) If signifcant variance occurs between
Quarterly Financial performance and
Annual Financial Statements the
management shall explain about the
variance on their Annual Report.
No such variance occurred
1.5(x) Remuneration to directors including
independent directors
page No. 111.
1.5(xi) The fnancial statements prepared by
the management of the issuer company
present fairly its state of afairs, the
result of its operations, cash fows and
changes in equity.
page No. 110.
1.5(xii) Proper books of account of the issuer
company have been maintained.
page No. 110.
DIRECTORS REPORT
118
Condition
No.
Title
Remarks
Complied
Not
Complied
1.5(xiii) Appropriate accounting policies
have been consistently applied in
preparation of the fnancial statements
and that the accounting estimates
are based on reasonable and prudent
judgment.
page No. 110
1.5(xiv) International Accounting Standards
(IAS)/Bangladesh Accounting Standards
(BAS)/International Financial Reporting
Standards (IFRS)/Bangladesh Financial
Reporting Standards (BFRS), as
applicable in Bangladesh, have been
followed in preparation of the fnancial
statements and any departure there-
from has been adequately disclosed.
page No. 110
1.5(xv) The system of internal control is sound
in design and has been efectively
implemented and monitored.
page No. 110
1.5(xvi) There are no signifcant doubts
upon the issuer companys ability to
continue as a going concern. If the
issuer company is not considered to be
a going concern, the fact along with
reasons thereof should be disclosed.
page No. 110
1.5(xvii) Signifcant deviations from the last
years operating results of the issuer
company shall be highlighted and the
reasons thereof should be explained.
page No. 110
1.5(xviii) Key operating and fnancial data of at
least preceding 5 (fve) years shall be
summarized.
page No. 111
1.5(xix) If the issuer company has not declared
dividend (cash or stock) for the year, the
reasons thereof shall be given.
Not applicable, as the Company
declared stock dividend @30% for
2012
1.5(xx) The number of Board meetings held
during the year and attendance by each
director shall be disclosed.
page No. 111
1.5(xxi) The pattern of shareholding shall be
reported to disclose the aggregate
number of shares (along with name wise
details where stated below) held by:-
page No. 111
1.5(xxi)(a) Parent/Subsidiary/Associated
Companies and other related parties
(name wise details);
1.5(xxi)(b) Directors, Chief Executive Of cer,

Company Secretary, Chief Financial
Of cer, Head of Internal Audit and their
spouses and minor children (name wise
details);
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
119
Condition
No.
Title
Remarks
Complied
Not
Complied
1.5(xxi)(c) Executives ;
1.5(xxi)(d) Shareholders holding ten percent (10%)
or more voting interest in the company
(name wise details).
1.5(xxii) In case of the appointment/re-

appointment of a director the company
shall disclose the following information
to the shareholders:-
Information regarding the Directors
is disclosed in brief profle of the
Directors at page No. 18
A brief resume of the director;
1.5(xxii)(a) Nature of his/her expertise in specifc
functional areas;
1.5(xxii)
(b)
Nature of his/her expertise in specifc
functional areas;
1.5(xxii)(c) Names of companies in which the
person also holds the directorship and
the membership of committees of the
board.
2.0 Chief Financial Of cer (CFO), Head of Internal Audit and Company Secretary (CS)
2.1 The company shall appoint a Chief
Financial Of cer (CFO), a Head of
Internal Audit (Internal Control
and Compliance) and a Company
Secretary (CS). The Board of Directors
should clearly defne respective roles,
responsibilities and duties of the CFO,
the Head of Internal Audit and the CS.
Before the holding of the 201
st
meeting of the Board on February 14,
2013, same person performed the
role of CFO and Company Secretary.
In compliance with revised CGG, the
Board at its 201st meeting appointed
a diferent individual as a Company
Secretary of the Company.
However, The Board of Directors at its
200
th
meeting held on December 19,
2012 clearly defned respective roles,
responsibilities and duties of the CFO,
the Head of Internal Audit and the CS.
2.2 Requirement to attend the Board
Meetings
The CFO and the Company Secretary
of the companies shall attend the
meetings of the Board of Directors,
provided that the CFO and/or the
Company Secretary shall not attend
such part of a meeting of the Board of
Directors which involves consideration
of an agenda item relating to their
personal matters.
3.0 AUDIT COMMITTEE:

3.0(i) The company shall have an Audit
Committee as a sub-committee of the
Board of Directors.
Refer to our Statement of Corporate
Governance at page No. 51
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
120
Condition
No.
Title
Remarks
Complied
Not
Complied
3.0(ii) The Audit Committee shall assist the
Board of Directors in ensuring that
the fnancial statements refect true
and fair view of the state of afairs of
the company and in ensuring a good
monitoring system within the business.
3.0(iii) The Audit Committee shall be
responsible to the Board of Directors.
The duties of the Audit Committee shall
be clearly set forth in writing.
3.1 Constitution of the Audit Committee:
3.1(i) The Audit Committee shall be
composed of at least 3 (three) members.
3.1(ii) The Board of Directors shall appoint
members of the Audit Committee
who shall be directors of the company
and shall include at least 1 (one)
Independent Director.
3.1(iii) All members of the audit committee

should be fnancially literate and
at least 1 (one) member shall have
accounting or related fnancial
management experience.
3.1(iv) Filling of casual vacancy in the Audit
Committee
No such vacancy created
3.1(v) The company secretary shall act as the
secretary of the Committee
3.1(vi) The quorum of the Audit Committee
meeting shall not constitute without
3.2 Chairman of the Audit Committee
3.2(i) The Board of Directors shall select 1
(one) member of the Audit Committee
to be Chairman of the Audit Committee,
who shall be an independent director.
st
meeting held
on February 14, 2013 appointed an
Independent Director as a Chairman
of the Audit Committee
3.2(ii) Chairman of the audit committee shall
remain present in the Annual General
Meeting (AGM)
Will be ensured
3.3 Role of Audit Committee:
3.3(i) Oversee the fnancial reporting process
3.3(ii) Monitor choice of accounting policies
and principles
3.3(iii) Monitor Internal Control Risk

management process
3.3(iv) Oversee hiring and performance of

external auditors
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
121
Condition
No.
Title
Remarks
Complied
Not
Complied
3.3(v) Review along with the management,
the annual fnancial statements before
submission to the board for approval
3.3(vi) Review along with the management,

the quarterly and half yearly fnancial
statements before submission to the
board for approval
3.3(vii) Review the adequacy of internal audit

function
3.3(viii) Review statement of signifcant related

party transactions submitted by the
management
3.3(ix) Review Management Letters/ Letter of

Internal Control weakness issued by
statutory auditors
3.3(x) Declaration to Audit Committee by the

company regarding utilization of IPO/
RPO, Right issue money.
No such event occurred
3.4 Reporting of the Audit Committee:
3.4.1(i) The Audit Committee shall report on its
activities to the Board of Directors.
3.4.1 (ii) The Audit Committee shall immediately
report to the Board of Directors on the
following fndings, if any:-
3.4.1(ii)(a) Report on conficts of interests ; No such event found
3.4.1(ii)(b) Suspected or presumed fraud or
irregularity or material defect in the
internal control system;
No such event found
3.4.1(ii)(c) Suspected infringement of laws,
including securities related laws, rules
and regulations;
No such event found
3.4.1(ii)(d) Any other matter which shall be disclosed
to the Board of Directors immediately.
No such event found
3.4.2 Reporting to the Authorities
Reported to the Board of Directors
about anything which has material
impact on the fnancial condition and
results of operation
No such event found
3.5 Reporting to the Shareholders and
General Investors
Report on the activities carried out by
the Audit Committee, including any
report made to the Board of Directors
under condition 3.4.1 (ii)
No such event found
4.0 EXTERNAL/STATUTORY AUDITORS:
The issuer company should not engage
its external/statutory auditors to
perform the following services of the
company; namely:-
The shareholders of the Company
in the 27
th
appointed statutory auditors of the
Company to perform statutory audit
for 2012 only.
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
122
Condition
No.
Title
Remarks
Complied
Not
Complied
4.0(i) Appraisal or valuation services or
fairness opinions.
4.0(ii) Financial information systems design

and implementation.
4.0(iii) Book-keeping or other services related

to the accounting records or fnancial
statements.
4.0(iv) Broker-dealer services.

4.0(v) Actuarial services.
4.0(vi) Internal Audit service
4.0(vii) Any other services that the Audit
Committee determines
4.0(viii) No partner or employees of the external

audit frms shall possess any share of
the company they audit at least during
the tenure of their audit assignment of
that company.
5.0 SUBSIDIARY COMPANY:

5.0(i) Provisions relating to the composition
of the Board of Directors of the holding
company shall be made applicable
to the composition of the Board of
Directors of the subsidiary company.
st
meeting held on
February 14, 2013 appointed two directors
in the each Board of the subsidiary
companies and the total number of
the members of the each Board of the
subsidiary companies stands at fve (5).
5.0(ii) At least 1 (one) independent director
on the Board of Directors of the holding
company shall be a director on the Board
of Directors of the subsidiary company.
st
meeting held
on February 14, 2013 appointed one
Independent Director in the each
Board of the subsidiary companies.
5.0(iii) The minutes of the Board meeting
of the subsidiary company shall be
placed for review at the following Board
meeting of the holding company.
5.0(iv) The minutes of the respective Board

meeting of the holding company shall
state that they have reviewed the afairs
of the subsidiary company also.
5.0(v) The Audit Committee of the holding

company shall also review the
fnancial statements, in particular the
investments made by the subsidiary
company.
6.0 Duties of Chief Executive Of cer (CEO) and Chief Financial Of cer (CFO):
The CEO and CFO shall certify to the Board that:-
6.0(i) They have reviewed fnancial
statements for the year and that to the
best of their knowledge and belief:
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
123
Condition
No.
Title
Remarks
Complied
Not
Complied
6.0(i)(a) These statements do not contain any
materially untrue statement or omit any
material fact or contain statements that
might be misleading;
6.0(i)(b) These statements together present a

true and fair view of the companys
afairs and are in compliance with
existing accounting standards and
applicable laws.
6.0(ii) There are, to the best of knowledge and

belief, no transactions entered into by
the company during the year which are
fraudulent, illegal or violation of the
companys code of conduct.
7.0 REPORTING AND COMPLIANCE OF CORPORATE GOVERNANCE:

7.0(i) The company shall obtain a certifcate
from a practicing Professional
Accountant/Secretary (Chartered
Accountant/Cost and Management
Accountant/Chartered Secretary)
regarding compliance of conditions of
Corporate Governance Guidelines of the
Commission and shall send the same to
the shareholders along with the Annual
Report on a yearly basis.
The certifcate is enclosed in this
Annual Report at page No. 115
7.0(ii) The directors of the company shall
state, in accordance with the Annexure
attached, in the directors report
whether the company has complied
with these conditions.
Refer to the Directors Report at page
No. 111
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
124
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
Annexure-IV
Statement of compliance on the good governance guideline issued by the Bangladesh Bank
By the DFIM Circular No. 7 dated 25 September 2007, Bangladesh Bank issued a policy on responsibility & accountability
of Board of Directors, Chairman & Chief Executive of the fnancial institution. The Board of Directors of the Company
has taken appropriate steps to comply with the guidelines and implemented the same.
Status report on compliance with those guidelines is given below:
Sl. No. Particulars Compliance Status
1. Responsibilities and authorities of the Board of Directors:
(a) Work-planning and strategic management:
(i) The Board shall determine the objectives and goals and to this end
shall chalk out strategies and work-plans on annual basis. It shall specially
engage itself in the afairs of making strategies consistent with the
determined objectives and goal and in the issues relating to structural
change and reorganization for enhancement of institutional ef ciency and
other relevant policy matters. It shall analyze/monitor at quarterly rests the
development of implementation of the work-plans.
Complied
(ii) The Board shall have its analytical review incorporated in the Annual
report as regard the success/failure in achieving the business and other
targets as set out in its annual work-plan and shall apprise the shareholders
of its opinions/recommendations on future plans and strategies.
Complied
(iii) The Board will set the Key Performance Indicator (KPI)s for the CEO and
other senior executives and will evaluate half yearly / yearly basis.
Complied
(b) Formation of sub-committee:
Executive Committee may be formed in combination with directors
(excluding any alternate Director) and management of the Company only
for rapid settlement of the emergency matters (approval of loan/lease
application, write-of, rescheduling etc.) arisen from the regular business
activities.
Complied
(c) Financial management:
(i) Annual budget and statutory fnancial statements shall be adopted
fnally with the approval of the Board.
Complied
125
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
(ii) Board shall review and examine in quarterly basis various statutory
fnancial statements such as statement of income-expenses, statement
of loan/lease, statement of liquidity, adequacy of capital, maintenance of
provision, legal afairs including actions taken to recovery of overdue loan/
lease.
Complied
(iii) Board shall approve the Companys policy on proqurement and collection
and shall also approve the expenditures according to policy. The Board
shall deligate the authority on the Managing Director and among other
top executives for approval of expenditure within budget to the maximum
extend.
Complied
(iv) The Board shall adopt the operation of bank accounts. Groups may be
formed among the management to operate bank accounts under joint
signatures.
Complied
(d) Management of loan/lease/investments:
(i) Policy on evaluation of loan/lease/investment proposal, sanction and
disbursement and its regular collection and monitoring shall be adopted
and reviewed by the Board regularly based on prevailing laws and
regulations. Board shall delegate the authority of loan/lease/investment
specifcally to management preferably on Managing Director and other top
executives.
Complied
(ii) No director shall interfere on the approval of loan proposal associated
with him. The director concerned shall not give any opinion on that loan
proposal.
Complied
(iii) Any large loan/lease/investment proposal must be approved by the
Board.
Complied
(e) Risk management:
Risk Management Guideline framed in the light of Core Risk Management
Guideline shall be approved by the Board and reviewed by the Board
regularly.
Complied
126
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
(f) Internal control and compliance management:
A regular Audit Committee as approved by the Board shall be formed.
Board shall evaluate the reports presented by the Audit Committee on
compliance with the recommendation of internal auditor, external auditors
and Bangladesh Bank Inspection team.
Complied
(g) Human resource management:
Board shall approve the policy on Human Resources Management and
Service Rule. Chairman and director of the Board shall not interfere on the
administrative job in line with the approved Service Rule.
Complied
Only the authority for the appointment and promotion of the Managing
Director/Deputy Managing Director/ General Manager and other equivalent
position shall lie with the Board incompliance with the policy and Service
Rule. No director shall be included in any Executive Committee formed for
the purpose of appointment and promotion of others.
Complied
(h) Appointment of CEO:
The Board shall appoint a competent CEO for the Company with the
approval of the Bangladesh Bank and shall approve any increment of his
salary and allowances.
Complied
(I) Benefts ofer to the Chairman:
Chairman may be ofered an of ce room, a personal secretary, a telephone
at the of ce, a vehicle in the business-interest of the Company subject to
the approval of the Board.
Complied
2 Responsibilities of the Chairman of the Board of Directors:
(a) Chairman shall not participate in or interfere into the administrative
or operational and routine afairs of the Company as he has no
jurisdiction to apply executive power;
Complied
(b) The minutes of the Board meetings shall be signed by the Chairman; Complied
127
WHAT WE STATE
Annual Report 2012
DIRECTORS REPORT
(c) Chairman shall sign-of the proposal for appointment of Managing
Director and increment of his salaries & allowances;
Complied
3 Responsibilities of Managing Director:
(a) Managing Director shall discharge his responsibilities on matters
relating to fnancial, business and administration vested by the
Board upon him. He is also accountable for achievement of fnancial
and other business targets by means of business plan, ef cient
implementation of administration and fnancial management;
Complied
(b) Managing Director shall ensure compliance of Financial Institutions
Act 1993 and other relevant circulars of Bangladesh Bank and other
regulatory authorities;
Complied
(c) All recruitment/promotion/training, except recruitment/promotion/
training of DMD, shall be vested upon the Managing Director. He shall
act such in accordance the approved HR Policy of the Company;
Complied
(d) Managing Director may re-schedule job responsibilities of employees; Complied
(e) Managing Director may take disciplinary actions against the employees
except DMD;
Complied
(f) Managing Director shall sign all the letters/statements relating to
compliance of polices and guidelines. However, Departmental/Unit
heads may sign daily letters/statements as set out in DFIM circular no. 2
dated 06 January 2009 if so authorized by MD.
Complied
128
Equal Opportunity
Report of the CEO & Managing Director and the Chief Financial Of cer
We have reviewed accompanying consolidated fnancial statements of IDLC Finance Limited and its
subsidiaries (the Group) as well as the fnancial statements of IDLC Finance Limited (the Company) which
comprise the consolidated and the separate balance sheet as at December 31, 2012, proft and loss account,
statement of changes in equity, cash fow statement for the year then ended, and a summary of signifcant
accounting policies and other explanatory notes.
These fnancial statements have been prepared and presented fairly in accordance with Bangladesh
Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs), the Financial
Institutions Act 1993, the rules and regulations issued by the Bangladesh Bank, the Companies Act 1994 and
other applicable laws and regulations.
The Company has taken proper and suf cient care in installing a system of internal control, which is reviewed,
evaluated and updated on an ongoing basis. The Internal Control & Compliance Department of the Company
conducts periodic audits to provide reasonable assurance that the established policies and procedures of
the Company were consistently followed.
Based on the internal control system of the Company and our review of these fnancial statements, we certify
that to the best of our knowledge and belief:
i) these statements do not contain any materially untrue statement or omit any material fact or contain
statements that might be misleading;
ii) these statements together present a true and fair view of the companys afairs and are in compliance
with existing accounting standards and applicable laws;
iii) no transactions entered into by the company during the year which are fraudulent, illegal or violation of
the companys code of conduct.
iv) proper books of account as required by law have been kept by the Group and the Company;
v) the expenditure incurred was for the purposes of the Group and the Companys business;
vi) adequate provisions have been made for leases and advances and other assets which are, in our opinion,
doubtful of recovery.
CEO & Managing Director Chief Financial Of cer
Dated: February 13, 2013
We have audited the accompanying consolidated nancial statements of IDLC Finance Limited and its subsidiaries (the
Group) as well as the nancial statements of IDLC Finance Limited (the Company) which comprise the consolidated
and the separate balance sheet as at 31 December 2012, prot and loss account, statement of changes in equity, cash ow
statement for the year then ended, and a summary of signicant accounting policies and other explanatory notes.
Managements responsibility for the nancial statements
Management is responsible for the preparation and fair presentation of these consolidated nancial statements of the
Group and the nancial statements of the Company in accordance with Bangladesh Accounting Standards (BASs) and
Bangladesh Financial Reporting Standards (BFRSs) as explained in note 2, the Financial Institutions Act 1993, the rules
and regulations issued by the Bangldesh Bank, the Securities and Exchange Rules 1987, the Companies Act 1994 and
other applicable laws and regulations, and for such internal control as management determines is necessary to enable the
preparation of nancial statements that are free from material misstatement, whether due to fraud or error.

Auditors responsibility
Our responsibility is to express an opinion on the consolidated nancial statements of the Group and the nancial
statements of the Company based on our audit. We conducted our audit in accordance with Bangladesh Standards on
Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the consolidated nancial statements of the Group and the nancial statements of
the Company are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
nancial statements of the Group and the nancial statements of the Company. The procedures selected depend on
the auditors judgment, including the assessment of the risks of material misstatement of the consolidated nancial
statements of the Group and the nancial statements of the Company, whether due to fraud or error. In making those
risk assessments, the auditors consider internal control relevant to the entitys preparation and fair presentation of the
consolidated nancial statements of the Group and the nancial statements of the Company in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated nancial statements of the Group and the nancial statements of the Company.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated nancial statements of the Group and the nancial statements of the Company have
been prepared in accordance with the Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting
Standards (BFRSs) as explained in note 2, give a true and fair view of the balance sheet of the Group and the Company
as at 31 December 2012 and the results of their prot and loss account and their cash ows for the year then ended
and comply with the applicable sections of the Financial Institutions Act 1993, the rules and regulations issued by
Bangladesh Bank, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and
regulations.
Auditors Report
to the shareholders of
IDLC Finance Limited and its subsidiaries
We also report that:
i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary
for the purposes of our audit and made due verication thereof;
ii) in our opinion, proper books of account as required by law have been kept by the Group and the Company so far
as it appeared from our examination of those books and proper returns adequate for the purposes of our audit have
been received from branches not visited by us;
iii) the consolidated balance sheet and consolidated prot and loss account of the Group and those of the Company
together with annexed note 1 to 43 dealt with by the report are in agreement with the books of account and
returns;
iv) the expenditure incurred was for the purposes of the Group and the Companys business;
v) the consolidated nancial position of the Group and those of the Company as at 31 December 2012 and their prot
for the year then ended have been properly reected in the consolidated nancial statements of the Group and those
of the Company, and these nancial statements have been prepared in accordance with the generally accepted
accounting principles;
vi) the consolidated nancial statements of the Group and those of the Company have been drawn up in conformity
with the Financial Institutions Act 1993 and in accordance with the accounting rules and regulations issued by the
Bangladesh Bank to the extent applicable to the Company;
vii) adequate provisions have been made for leases and advances and other assets which are, in our opinion, doubtful of
recovery;
viii) the records and statements submitted by the branches have been properly maintained and consolidated in the
nancial statements;
ix) the information and explanations required by us have been received and found satisfactory;
x) the Company has complied with relevant laws pertaining to reserves and found satisfactory;
xi) the consolidated nancial statements of the Group and those of the Company conform to the prescribed standards
set in the accounting regulations issued by Bangladesh Bank after consultation with the professional accounting
bodies of Bangladesh;
xii) we have reviewed over 80% of the risk weighted assets of the Group and the Company during the course of our audit
and we have spent over 1,930 person hours.
Hoda Vasi Chowdhury & Co
Dhaka, 14 February 2013 Chartered Accountants
132 CONSOLIDATED BALANCE SHEET
OUR FINANCIAL PERFORMANCE - IDLC GROUP
Annual report 2012
Consolidated Balance Sheet
as at December 31, 2012
Particulars Note
2012 2011
Taka Taka
PROPERTY AND ASSETS
Cash 3
In hand 3.1 251,000 246,000
Balance with Bangladesh Bank 3.2 565,343,055 417,207,356
565,594,055 417,453,356
Balance with other banks and fnancial institutions in Bangladesh 4 3,275,459,753 2,133,007,415
Money at call and short notice 5 40,000,000 670,000,000
Investments 6
Government - -
Others 387,543,923 549,596,742
387,543,923 549,596,742
Loans, advances and leases 7 32,595,178,553 26,357,104,245
Fixed assets including land, building, furniture and fxtures 8(a) 471,830,413 355,694,293
Other assets 9 448,259,040 681,684,403
Total Assets 37,783,865,737 31,164,540,454
LIABILITIES AND CAPITAL
Liabilities
Borrowings from other banks and fnancial institutions 10 4,333,821,600 4,565,821,153
Deposits and other accounts 11
Term deposits 22,008,203,723 16,828,267,206
Other deposits 990,695,376 810,581,392
22,998,899,099 17,638,848,598
Other liabilities 12 5,757,851,191 4,979,398,082
Total liabilities 33,090,571,890 27,184,067,833
Capital / Shareholders' equity
Paid-up capital 13 1,237,500,000 990,000,000
Share premium 14 3,750,000 3,750,000
Statutory reserves 15 841,050,246 723,210,192
General reserves 16 811,250,000 811,250,000
Dividend equalisation reserves 46,500,000 46,500,000
Retained earnings 1,753,241,814 1,405,760,814
Total equity attributable to equity holders of the company 4,693,292,060 3,980,471,006
Non-controlling interest 1,787 1,615
Total liabilities and Shareholders' equity 37,783,865,737 31,164,540,454
133 CONSOLIDATED BALANCE SHEET
Annual report 2012
Particulars Note
2012 2011
Taka Taka
OFF - BALANCE SHEET ITEMS
Contingent liabilities 17.1
Letters of guarantee 1,051,435 -
Irrevocable letters of credit 127,193,600 126,958,540
Indemnity bond 8,811,279 8,811,279
137,056,314 135,769,819
Other commitments 17.2
Undisbursed contracted loans and leases 94,523,911 1,274,012,995
Total Of-Balance Sheet items 231,580,225 1,409,782,814
Net assets value per share 37.93 32.17
The annexed notes 1 to 43 form an integral part of these fnancial statements.
Chairman Director
CEO & Managing Director Company Secretary
Auditors report to the shareholders
see annexed report of date
134
Consolidated Proft and Loss Account
Particulars Note
2012 2011
Taka Taka
Interest income 19 4,853,769,697 3,942,101,471
Interest expenses 20 (3,102,879,252) (2,364,389,738)
Net interest income 1,750,890,445 1,577,711,733
Investment income 21 57,894,350 (107,841,926)
Commission and brokerage 22 336,660,324 462,752,097
Other operating income 23 257,794,715 227,252,920
Total operating income 2,403,239,834 2,159,874,824
Salaries and allowances 24 514,968,850 431,010,582
Rent, taxes, insurance, electricity, etc. 25 102,436,907 108,031,424
Legal expenses 26 10,273,842 17,585,871
Postage, stamp, telecommunication, etc. 27 28,105,616 31,193,643
Stationery, printing, advertisements, etc. 28 75,103,834 45,356,398
Managing Director's salary and benefts 29 10,527,400 10,527,400
Directors' fees 30 839,500 753,250
Auditors' fees 31 602,250 1,023,450
Charges on loan losses - -
Depreciation and repair of Company's assets 32 146,733,769 106,104,413
Other expenses 33 168,513,040 161,874,299
Total operating expenses 1,058,105,008 913,460,730
Proft before provision 1,345,134,826 1,246,414,094
Provision for loans / investments 12.8(ii)
General provision 69,764,096 39,600,062
Specifc provision 69,144,373 (98,489,199)
Provision for diminution in value of investments (45,961,809) 88,700,713
Total provision 92,946,660 29,811,576
Total proft before taxes 1,252,188,166 1,216,602,518
Provision for taxation
Current tax 12.2 529,448,423 730,035,667
Deferred tax 9.5 9,918,517 (13,716,103)
539,366,940 716,319,564
Net proft after taxation 712,821,226 500,282,954
Attributable to:
Shareholders of the Company 712,821,054 500,283,267
Non-controlling interest 172 (313)
712,821,226 500,282,954
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Annual report 2012
135
Particulars Note
2012 2011
Taka Taka
Appropriations:
Statutory reserve 117,840,054 160,845,796
General reserve - -
117,840,054 160,845,796
Retained surplus 594,981,000 339,437,471
Earnings per share (EPS) 36 5.76 4.04
Chairman Director
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Annual report 2012
136
Particulars
2012 2011
Taka Taka
A) Cash fows from operating activities
Interest received 4,431,115,070 3,942,101,471
Interest paid (1,179,869,087) (808,673,230)
Dividend received 9,243,980 35,321,280
Fees and commission received 176,064,712 462,752,097
Paid to employees and suppliers (943,174,630) (822,419,115)
Payment of income tax (490,367,150) (618,989,790)
Received from other operating activities 306,356,540 75,607,237
Cash generated from operating activities before changes in operating
assets and liabilities 2,309,369,435 2,265,699,950

Increase / (decrease) in operating assets and liabilities
Lease receivable (932,337,066) (440,112,207)
Long-term fnance (4,086,583,811) (3,565,405,481)
Real estate fnance (1,283,146,569) (1,374,426,696)
Car loans (23,184,492) (46,214,881)
Personal loan 24,543,838 126,415
Loan against deposit (50,827,831) (218,837,353)
Margin loan to portfolio investors 124,208,368 914,736,743
Short term fnance 239,804,429 (353,521,833)
Net proceeds of investment in marketable securities 124,737,102 (51,829,620)
Other assets 613,503,228 365,286,434
Term and other deposits 5,360,050,501 4,637,502,043
Net drawdown of short term loan (660,840,397) 180,840,397
Payable and accrued expenses (1,563,949,678) (1,447,251,667)
Deferred liability-employee gratuity 12,950,281 9,286,840
Portfolio investors' fund 208,922,265 (884,637,698)
Deferred tax liability 15,770,050 5,513,603
Interest suspense account (7,416,465) 18,667,866
(1,883,796,247) (2,250,277,095)
Net cash from operating activities 425,573,188 15,422,855
B) Cash fows from investing activities
Purchase of property and equipment (248,760,240) (155,981,199)
Disposal of property and equipment 17,755,463 43,398,941
Net proceeds of investment in non marketable securities 37,315,717 77,698,016
Net cash used in investing activities (193,689,060) (34,884,242)
Consolidated Cash Flow Statement
CONSOLIDATED CASH FLOW STATEMENT
Annual report 2012
137
Particulars
2012 2011
Taka Taka
C) Cash fows from fnancing activities
Drawdown of term loans 1,812,599,238 1,248,068,525
Repayment of term loans (1,383,758,396) (1,520,055,293)
Payment against lease obligation (93,337) (2,697,263)
Dividend paid (38,596) (208,281,707)
Net cash from fnancing activities 428,708,909 (482,965,738)
D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 660,593,037 (502,427,125)
E) Efects of exchange rate changes on cash and cash equivalents - -
F) Cash and cash equivalents at beginning of the year 3,220,460,771 3,722,887,896
G) Cash and cash equivalents at end of the year (D+E+F) 3,881,053,808 3,220,460,771
Cash and cash equivalents at end of the year
Cash in hand (including foreign currencies) (Note-3.1) 251,000 246,000
Money at call and short notice (Note-5) 40,000,000 670,000,000
Balance with Bangladesh Bank and its agent bank (s) (Note-3.2) 565,343,055 417,207,356
Balance with other banks and fnancial institutions (Note- 4) 3,275,459,753 2,133,007,415
3,881,053,808 3,220,460,771
CONSOLIDATED CASH FLOW STATEMENT
Annual report 2012
138
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Annual report 2012
140 BALANCE SHEET
Balance Sheet
as at December 31, 2012
Particulars Note
2012 2011
Taka Taka
PROPERTY AND ASSETS
Cash 3
In hand 3.1 151,000 136,000
Balance with Bangladesh Bank 3.2 565,343,055 417,207,356
565,494,055 417,343,356
Balance with other banks and fnancial institutions in Bangladesh 4 2,980,373,758 1,404,989,474
Money at call and short notice 5 40,000,000 670,000,000
Investments 6
Government - -
Others 205,195,378 397,108,875
205,195,378 397,108,875
Loans, advances and leases 7 30,938,682,259 25,540,199,582
Fixed assets including land, building, furniture and fxtures 8 405,780,043 259,707,167
Other assets 9 612,646,289 829,466,848
Total Assets 35,748,171,782 29,518,815,302
LIABILITIES AND CAPITAL
Liabilities
Borrowings from other banks and fnancial institutions 10 4,333,821,600 4,565,821,153
Deposits and other accounts 11
Term deposits 22,008,203,723 16,828,267,206
Other deposits 990,695,376 810,581,392
22,998,899,099 17,638,848,598
Other liabilities 12 4,605,735,240 4,093,629,977
Total liabilities 31,938,455,939 26,298,299,728
Capital / Shareholders' equity
Paid-up capital 13 1,237,500,000 990,000,000
Share premium 14 3,750,000 3,750,000
Statutory reserves 15 841,050,246 723,210,192
General reserves 16 811,250,000 811,250,000
Dividend equalisation reserves 46,500,000 46,500,000
Retained earnings 869,665,597 645,805,382
Total equity 3,809,715,843 3,220,515,574
Total liabilities and Shareholders' equity 35,748,171,782 29,518,815,302
Annual report 2012
141 BALANCE SHEET
Particulars Note
2012 2011
Taka Taka
OFF - BALANCE SHEET ITEMS
Contingent liabilities 17.1
Letters of guarantee 1,051,435 -
Irrevocable letters of credit 127,193,600 126,958,540
Indemnity bond 8,811,279 8,811,279
137,056,314 135,769,819
Other commitments 17.2
Undisbursed contracted loans and leases 94,523,911 1,274,012,995
Total Of-Balance Sheet items 231,580,225 1,409,782,814
Net assets value per share 30.79 26.02
Chairman Director
Annual report 2012
142 PROFIT AND LOSS ACCOUNT
Particulars Note
2012 2011
Taka Taka

Interest income 19 4,712,055,155 3,826,541,599
Interest expenses 20 (3,087,770,161) (2,359,226,854)
Net interest income 1,624,284,994 1,467,314,745
Investment income 21 41,781,516 185,918,988
Commission and brokerage 22 31,088,597 179,437,286
Other operating income 23 258,327,660 210,016,857
Total operating income 1,955,482,767 2,042,687,876
Salaries and allowances 24 403,925,724 333,051,679
Rent, taxes, insurance, electricity, etc. 25 58,419,422 53,015,020
Legal expenses 26 6,140,794 11,473,555
Postage, stamp, telecommunication, etc. 27 16,348,704 18,458,870
Stationery, printing, advertisements, etc. 28 71,372,242 41,050,954
Managing Director's salary and benefts 29 10,527,400 10,527,400
Directors' fees 30 655,500 638,250
Auditors' fees 31 470,000 839,500
Charges on loan losses - -
Depreciation and repair of Company's assets 32 106,990,172 70,202,179
Other expenses 33 147,177,332 132,961,065
Total operating expenses 822,027,290 672,218,472
Proft before provisions 1,133,455,477 1,370,469,404
Provision for loans / investments 12.8(ii)
General provision 69,764,096 39,600,062
Specifc provision 69,144,373 (98,489,199)
Total provision 100,889,683 (5,912,781)
Total proft before taxes 1,032,565,794 1,376,382,185
Provision for taxation
Current tax 12.2 428,387,353 575,129,014
Deferred tax 9.5 14,978,172 (2,975,808)
443,365,525 572,153,206
Net proft after taxation 589,200,269 804,228,979
Proft and Loss Account
Annual report 2012
143 PROFIT AND LOSS ACCOUNT
Particulars Note
2012 2011
Taka Taka
Appropriations:
Statutory reserve 117,840,054 160,845,796
General reserve - -
117,840,054 160,845,796
Retained surplus 471,360,215 643,383,183
Earnings per share (EPS) 36 4.76 6.50
Chairman Director
Annual report 2012
144 PROFIT AND LOSS ACCOUNT OF MERCHANT BANKING OPERATION
Annual report 2012
Particulars Note
2012 2011
Taka Taka
Interest income - 549,625,294
Interest expenses 18.3 - (353,952,752)
Net interest income - 195,672,542
Custodial fee - 133,678
Advisory fee - 3,350,000
Issue management fee - 4,800,000
Documentation fee - 169,000
Portfolio management fee - 100,324,985
Settlement charge - 67,174,109
Underwriting commission - 846,289
Total fee & commission income - 176,798,061
Total operating income - 372,470,603
Administrative expenses 18.4 - 40,227,592
Depreciation on property and equipment 8.1 - 3,129,577
Other expenses 18.5 - 14,069,353
Total operating expenses - 57,426,522
Proft before provision - 315,044,081
Provision for future losses 12.8(i) - 1,489,931
Proft before tax (PBT) - 313,554,150
* With efect from August 16, 2011, the activities of Merchant Banking Operation have been transferred to the new subsidiary of the company
"IDLC Investments Limited".
(Merchant Banking Operation)
Proft and Loss Account
for the period ended August 15, 2011*
Chairman Director
145 CASH FLOW STATEMENT
Cash Flow Statement
Particulars
2012
Taka
2011
Taka
A) Cash fows from operating activities
Interest received 4,293,243,722 3,394,898,874
Interest paid (1,164,759,996) (803,510,346)
Dividend received 6,272,326 227,497,685
Fees and commission received 31,088,597 179,437,286
Paid to employees and suppliers (734,440,108) (606,656,520)
Payment of income tax (403,902,171) (512,884,375)
Received from other operating activities 290,637,114 159,897,739
Cash generated from operating activities before changes in operating assets and liabilities 2,318,139,484 2,038,680,343
Increase / (decrease) in operating assets and liabilities
Lease receivable (932,337,066) (440,112,207)
Long-term fnance (4,086,583,811) (3,565,405,481)
Real estate fnance (1,283,146,569) (1,374,426,696)
Car loans (23,184,492) (46,214,881)
Personal loan 24,543,838 126,415
Loan against deposit (50,827,831) (218,837,353)
Margin loan to portfolio investors - 5,633,191,635
Loan to IDLC Investments Limited 723,119,060 (3,669,276,020)
Short term fnance 239,804,429 (353,521,833)
Net proceeds of investment in marketable securities 154,597,780 (17,387,527)
Other assets 625,761,757 (42,492,434)
Term and other deposits 5,360,050,501 4,637,502,043
Net drawdown of short term loan (660,840,397) 180,840,397
Payable and accrued expenses (1,581,073,846) (1,237,299,337)
Inter-company payables 11,374,735 (1,127,136)
Deferred liability-employee gratuity 10,219,522 4,355,197
Portfolio investors' fund - (1,375,958,530)
Deferred tax liability 15,770,050 5,513,603
Interest suspense account (7,416,465) 18,667,866
(1,460,168,805) (1,861,862,279)
Net cash from operating activities 857,970,679 176,818,064
B) Cash fows from investing activities
Purchase of property and equipment (237,769,166) (119,467,489)
Disposal of property and equipment 7,308,844 39,471,920
Net proceeds of investment in non marketable securities 37,315,717 77,698,016
Net cash used in investing activities (193,144,605) (2,297,553)
C) Cash fows from fnancing activities
Drawdown of term loans 1,812,599,238 1,248,068,525
Repayment of term loans (1,383,758,396) (1,520,055,293)
Payment against lease obligation (93,337) (2,697,263)
Dividend paid (38,596) (208,281,407)
Net Cash from fnancing activities 428,708,909 (482,965,438)
D) Net increase / (decrease) in cash and cash equivalents (A+ B + C) 1,093,534,983 (308,444,927)
E) Efects of exchange rate changes on cash and cash equivalents
F) Cash and cash equivalents at beginning of the year 2,492,332,830 2,800,777,757
G) Cash and cash equivalents at end of the year (D+E+F) 3,585,867,813 2,492,332,830
Cash and cash equivalents at end of the year
Cash in hand (including foreign currencies) (Note-3.1) 151,000 136,000
Money at call and short notice (Note-5) 40,000,000 670,000,000
Balance with Bangladesh Bank and its agent bank (s) (Note-3.2) 565,343,055 417,207,356
Balance with other banks and fnancial institutions (Note- 4 ) 2,980,373,758 1,404,989,474
3,585,867,813 2,492,332,830
Annual report 2012
146 STATEMENT OF CHANGES IN EQUITY

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3
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2
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1
2
Annual report 2012
147 STATEMENT OF CHANGES IN EQUITY
Annual report 2012

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3
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2
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1
148 LIQUIDITY STATEMENT
I
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3
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7
1
5
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4
3

Annual report 2012
149
Annual Report 2012
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Notes to the consolidated and separate fnancial statements
as at and for the year ended December 31, 2012
1. Company and its activities
1.1 Legal status and nature of the Company
IDLC Finance Limited (The Company) IDLC" was incorporated in Bangladesh as a public limited company on
May 23, 1985 under the Companies Act 1913 in its original name of Industrial Development Leasing Company of
Bangladesh Limited with its registered of ce at Hadi Mansion, 2 Dilkusha C/A. The Company changed its name in
August 2007. The registered of ce of the Company was changed to Bays Galleria (1st Floor), 57 Gulshan Avenue,
Gulshan 1, Dhaka on July 1, 2006. The Company was registered as a Financial Institution under the Financial
Institutions Act 1993 and as a Merchant Bank in 1998 with the Bangladesh Securities and Exchange Commission
(BSEC).
The Company went for public issue of its shares in 1993. Its shares are listed in the Stock Exchanges in Bangladesh.
1.2 Principal activities and nature of operation
The Company extends lease and term fnancing, as its core businesses. It expanded its activities into 'Short-Term
Finance' (factoring of accounts receivable and work order fnancing) and 'Real Estate Finance' operations in 1997
and merchant banking and corporate fnance in 1999. It also started portfolio management, car loan and personal
loan services to individuals in 2004 and 2007 respectively. Later on in August 2011, a wholly owned subsidiary
"IDLC Investments Limited" went into operation to do the merchant banking business of the company.
1.3 Subsidiary companies
1.3.1 IDLC Securities Limited
IDLC Securities Limited, a wholly owned subsidiary company of IDLC Finance Limited, was incorporated on 19 April,
2006 as a private limited company under Companies Act 1994 with authorised share capital of Tk 25 crore. The
Company had started its operation from September 2006. The main objective of the Company is to act as a member
of stock exchanges, operate the central depository system (CDS) and to carry on the business of brokers, jobbers or
dealers in stocks, shares, securities, commodities, commercial papers, bonds, obligations, debentures etc.
1.3.2 IDLC Investments Limited
As required by the Bangladesh Securities & Exchange Commission (BSEC), 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 obtained license from the BSEC on August 02, 2011 in the name of IDLC
Investments Limited for operating existing merchant banking operation of IDLC Finance Limited and commenced
its business on August 16, 2011. The authorised and paid up capital of the Company are Tk. 300 crore and Tk.
40 crore, respectively, and out of the total 4,000,000 number of paid up shares, the holding of IDLC is 3,999,999
number of Shares. The paid up capital of this new company was raised, in kind, in exchange of a part of the
balance of margin loan provided to the investors.
2. Basis of preparation and signifcant accounting policies
2.1 Statement of compliance
The fnancial statements have been prepared on a going concern basis following accrual basis of accounting
except for investment in marketable securities which are stated at market value in accordance with the
Companies Act 1994, the Financial Institutions Act 1993, Securities and Exchange Rules 1987, the Listing Rules of
Dhaka and Chittagong Stock Exchanges and International Accounting Standards (IASs) and International Financial
Reporting Standards (IFRSs) as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh
as Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs), except the
circumstances where local regulations difer, and other applicable laws and regulations.
150
The presentation of the fnancial statements has been made as per the requirements of DFIM Circular No: 11,
dated December 23, 2009 issued by the Department of Financial Institutions and Markets of Bangladesh Bank.
The activities and accounting heads mentioned in the prescribed form, which are not applicable for the fnancial
institutions, have been excluded in preparing the fnancial statements.
2.2 Basis of measurement
This fnancial statements have been prepared based on Bangladesh Accounting Standards (BASs) and Bangladesh
Financial Reporting Standards (BFRSs) and no adjustment has been made for infationary factors afecting the
fnancial statements. The accounting policies, unless otherwise stated, have been consistently applied by the
Company and are consistent with those of the previous year.
2.3 Disclosure of deviations from few requirements of BAS/BFRS due to mandatory compliance of Bangladesh
Banks requirements
Bangladesh Bank (the local Central Bank) is the prime regulatory body for Non-Banking Financial Institutions
(NBFI) in Bangladesh. Some requirements of Bangladesh Banks rules and regulations contradict with those of
fnancial instruments and general provision standards of BAS and BFRS. As such the Company has departed from
those contradictory requirements of BAS/BFRS in order to comply with the rules and regulations of Bangladesh
Bank which are disclosed below along with fnancial impact where applicable.
2.3.1 As per FID circular No. 08 dated 03 August 2002 investments in quoted shares and unquoted shares are revalued
at the year end at market price and as per book value of last audited balance sheet respectively.
Provision should be made for any loss arising from diminution in value of investment. As such the company
measures and recognises investment in quoted and unquoted shares at cost if the year-end market value (for
quoted shares) and book value (for unquoted shares) are higher than the cost. At the year-end the Companys
market value and book value of quoted and unquoted shares was lower than the cost price by BDT 14.96 million
in case of the separate fnancial statements and in case of the consolidated fnancial statements the same is
higher than cost by BDT 53.59 million. In order to comply with the requirement specifed in DFIM Circular No. 11,
the Company has charged the entire amount of diference in market value and cost price of marketable securities
to the proft and loss. However as per requirements of BAS 39 investment in shares falls either under at fair value
through proft and loss account or under available for sale where any change in the fair value at the year-end is
taken to proft and loss account or revaluation reserve respectively.
2.3.2 As per FID circular No. 08 dated 03 August 2002 and FID circular No. 03, dated 03 May 2006 a general provision at
1% to 5% under diferent categories of unclassifed loans (good/standard loans) has to be maintained. However
such general provision cannot satisfy the conditions of provision as per BAS 39. At the year end the Company has
recognised an accumulated provision of BDT 863 million in case of the separate fnancial statements and 901.6
million in case of the consolidated fnancial statement under liabilities.
2.3.3 Bangladesh Bank has issued templates for fnancial statements which will strictly be followed by all banks and
NBFIs. The templates of fnancial statements issued by Bangladesh Bank do not include Other Comprehensive
Income (OCI) nor are the elements of Other Comprehensive Income allowed to be included in the Single
Comprehensive Income (OCI) Statement. As such the company does not prepare the other comprehensive
income statement. However the company does not have any elements of OCI to be presented.
2.3.4 As per Bangladesh Bank guidelines fnancial instruments are categorized, recognized and measured diferently
from those prescribed in BAS 39. As such some disclosures and presentation requirements of BFRS 7 and BAS 32
have not been made in the accounts.
2.4 Date of authorisation
The Board of director has authorised this fnancial statement for public issue on February 14 , 2013.
2.5 Presentation and functional currency and level of precision
The fnancial statements are presented in Bangladesh Taka (BDT) currency, which is the Company's functional
currency. All fnancial information presented in BDT has been rounded of to the nearest BDT.
Annual report 2012
151
2.6 Use of estimates and judgments
The preparation of fnancial statements in conformity with Bangladesh Accounting Standards (BAS) and
Bangladesh Financial Reporting Standards (BFRS) requires management to make estimates and assumptions that
afect the reported amounts of assets, liabilities, revenue and expenses. It also requires disclosures of contingent
assets and liabilities at the date of the fnancial statements.
The most critical estimates and judgments are applied to the following:
- Provision for impairment of loans, leases and investments; and
- Gratuity.
The estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the result of which form the basis of making the judgments
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
difer from these estimates. However, the estimates and underlying assumptions are reviewed on an ongoing
basis and the revision is recognised in the period in which the estimates are revised.
2.7 Directors' responsibility statement
The Board of Directors takes the responsibility for the preparation and presentation of these fnancial statements.
2.8 Basis of consolidation of operations of subsidiaries
The fnancial statements of the Company and its subsidiaries, as mentioned in note No. 1.3.1 and 1.3.2 have been
consolidated in accordance with Bangladesh Accounting Standard 27 "Consolidated and Separate Financial
Statements". The consolidation of the fnancial statement has been made after eliminating all material inter
company balances, income and expenses arising from inter company transactions.
The total profts of the Company and its subsidiaries are shown in the consolidated proft and loss account with
the proportion of proft after taxation pertaining to non-controlling shareholders being deducted as 'Non-
controlling interest'.
All assets and liabilities of the Company and of its subsidiaries are shown in the consolidated balance sheet. The
interest of non-controlling shareholders of the subsidiary are shown separately in the consolidated balance sheet
under the heading 'Non-controlling interest'.
2.9 Branch accounting
The Company has sixteen branches and two SME booths, with no overseas branch as on December 31, 2012.
Accounts of the branches are maintained at the head of ce from which these accounts are drawn up.
2.10 Accounting for leases
As per Bangladesh Accounting Standard (BAS) 17 Leases, all leases are treated as fnance lease since assets
leased under agreements are transferred substantially to customers with all the risks and rewards associated with
ownership, other than legal title and all leases are full payout leases.
In accordance with the said standard, the Company recognises assets held under fnance lease in its Balance Sheet
and present them as a receivable at an amount equal to the net investment in the lease.
2.11 Accounting for direct fnance
Books of accounts for direct fnance operation are maintained based on the accrual method of accounting.
Outstanding loans, along with the accrued interest thereon, for short-term fnance, and unrealised principal for
long-term fnance, real estate fnance, car loans and other fnances are accounted for as direct fnance assets of
the Company. Interest earnings are recognised as operational revenue periodically.
Annual Report 2012
152
2.12 Merchant banking operation
As per Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules 1996, the services
of issue management, portfolio management, underwriting of shares and securities advisory services fall under
the purview of merchant banking operation. Accordingly, proft and loss account of merchant banking operation
includes revenue from issue management, underwriting and portfolio management services and the Company
maintains separate books of accounts for the merchant banking operation as required under the regulations of the
Bangladesh Securities and Exchange Commission (BSEC).
As required by the BSEC, Merchant Banking activities of fnancial institutions are to be carried out by forming a
separate subsidiary. Accordingly, the Company has formed a fully owned separate subsidiary, IDLC Investments
Limited (IDLCIL) and commenced its operation on August 16, 2011. Therefore, up to August 15, 2011, the Merchant
Banking activities of the Company was accounted for by the Company and thereafter, the entire Merchant Banking
activities was transferred to and accounted for by IDLCIL.
2.13 Property and equipment
i) Recognition and measurement
Owned assets
Items of own property and equipments are measured at cost less accumulated depreciation and any accumulated
impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing
the assets to its working condition for its intended use as per Bangladesh Accounting Standard (BAS) 16 ''Property,
Plant and Equipments''.
Leasehold assets
Leasehold assets of which the company assumes substantially all the risks and rewards of ownership are accounted
for as fnance leases and capitalised at the inception of the lease at fair value of the leased property or at the
present value of the minimum lease payments, whichever is lower as per Bangladesh Accounting Standard (BAS)
17 "Leases". The corresponding obligation under the lease is accounted for as liability.

ii) Subsequent expenditure on property and equipment
Subsequent expenditure is capitalised only when it increases the future economic beneft from the assets and that
cost can be measured reliably. All other expenditures are recognised as an expense as and when they are incurred.
iii) Depreciation
Depreciation is charged to amortise the cost of assets, over their estimated useful lives, using the straight-line
method in accordance with BAS-16 "Property, Plant and Equipment". Full depreciation is charged on additions
irrespective of date when the related assets are put into use and no depreciation is charged for the month of
disposal. Asset category wise depreciation rates are as follows:
Rates
Furniture and fxtures 12.50%
Building 2.50%
Electrical equipment 20.00%
Curtain and carpets 33.33%
Of ce equipment 20.00%
Of ce decoration 20.00%
Telephone and telex 33.33%
Motor vehicles 25.00%
Leasehold motor vehicles 25.00%
Computers 20.00%
Software 33.33% & 20.00%
Annual report 2012
153
The gain or loss arising on the disposal or retirement of an asset is determined as the diference between the sale
proceeds and the carrying amount of the asset and is recognised in the proft and loss account.
Depreciation methods, useful lives and residual values, if any are reviewed at the balance sheet date.
2.14 Intangible assets and amortisation of intangible assets
Intangible assets comprise the value of computer software. Intangible assets acquired separately are measured
on initial recognition at cost and are carried at cost less accumulated amortisation and accumulated impairment
losses if any. Amortisation is calculated using the straight line method to write down the cost of intangible assets to
their residual values over their estimated useful lives based on the management best estimates of three (3) years.
Subsequent expenditure on software assets is capitalised only when it increases the future economic benefts in
the specifcations to which it relates. All other expenditure is expensed as incurred.
2.15 Revenue recognition
Interest income from loans and other sources is recognised on an accrual basis of accounting on efective interest
method.
Lease income:
Finance Lease income is allocated over the lease term on a systematic and rational basis. This income allocation is
based on a pattern refecting a constant periodic return on net investment in the fnance lease. The unearned lease
income is recognised on installment date as revenue on an accrual basis over the terms of the lease. However, lease
income is not recognised if capital or interest receivable is in arrears for more than three months.
Interest on real estate fnance:
Interest on real estate fnance is recognised as revenue on an accrual basis and no interest on real estate fnance is
accounted for as revenue where any portion of capital or interest is in arrear for more than nine months.
Interest on term loans and short term fnance:
Interest on term loan and short term fnance are recognised as revenue on an accrual basis and interest income on
term loan is not recognised where any portion of interest is in arrear for more than three months.
Dividend income and proft or loss on sale of securities:
Dividend is recognised as income when the right to receive income is established whereas proft or loss arising
from the sale of securities is accounted for only when the securities are sold/of oaded.
Fee based revenues:
Fee on services rendered by the Company are recognised as and when services are rendered.
2.16 Interest suspense account
Lease income earned, interest on term fnance and on car loans overdue beyond three months period and interest
on real estate fnance overdue beyond nine months period are not recognised as revenue and credited to interest
suspense account.
2.17 Accounts receivable
Accounts receivable at the balance sheet date is stated at amounts which are considered realisable. Specifc
allowance is made for receivable considered to be doubtful for recovery.
Annual Report 2012
154
2.18 Securitization
Securitization of various leases/loans result in sale of these assets to Special Purpose Vehicles ('SPVs'), which, in turn
issue securities to investors. Financial assets are partially or wholly derecognized when the control of the contractual
rights in the securitized assets is lost.
2.19 Borrowing cost
Borrowing costs are recognised as expense in the year in which they are incurred unless capitalisation is permitted
under Bangladesh Accounting Standard (BAS) 23 "Borrowing Costs".
2.20 Cash fow statements
The cash fow statement is prepared using the direct method as stipulated in Bangladesh Accounting Standard
(BAS) 7 "Cash Flow Statements", and in accordance with the instruction of Bangladesh Bank.
2.21 Conversion of foreign currency transactions
Foreign currency transactions are translated into Taka at rates prevailing at the respective dates of transactions,
while foreign currency monetary assets at the end of the year are reported at the rates prevailing on the balance
sheet date. Exchange gains or losses arising out of the said conversions are recognised as income or expense for the
year after netting of. However, Company did not have any foreign currency transaction during the year.
2.22 Investment in securities
Investment in marketable ordinary shares has been shown at cost or market price, whichever is lower, on an
aggregate portfolio basis. Investment in non-marketable shares has been valued at cost. Full provision for
diminution in value of shares as on closing of the year on an aggregate portfolio basis is made in the fnancial
statements as required by Bangladesh Bank DFIM circular No. 02 dated January 31, 2012.
2.23 Provision for doubtful accounts and future losses
Provision has been made at estimated rates on outstanding exposures, based on aging and continuous review of the
receivables, as per the Company policy. IDLCs internal provisioning policy is more conservative than that prescribed
by the regulators. The Company, therefore maintains a higher provision than required by statutory regulations. In
addition, a general provision has also been made by the company to cover unforeseen losses on all leases, loans and
investments excluding those for which a specifc provision has been made. The provision is considered adequate to
meet any probable future losses.
2.24 Write of:
Write-of describes a reduction in recognised value. It refers to recognition of the reduced or zero value of an asset.
Generally it refers to an investment for which a return on the investment is now impossible or unlikely. The item's
potential return is thus canceled and removed from ("written of") the Company's balance sheet.
Recovery against debts written of/provided for is credited to revenue. Income is recognized where amounts are
either recovered and/or adjusted against securities/properties or advances there-against or are considered
recoverable.
2.25 Employees beneft obligation
2.25.1 Defned contribution plan
The Company operates a contributory provident fund scheme for its permanent employees. Provident fund is
administered by a Board of Trustees and is funded by equal contributions both by the employees and the Company
at a predetermined rate. The contributions are invested separately from the Company's asset.
Annual report 2012
155
2.25.2 Defned beneft plan
The Company also operates an unfunded gratuity scheme (which is a defned beneft scheme as specifed in BAS 19).
Employees are entitled to gratuity beneft after completion of minimum fve years of service with the Company. The
gratuity is calculated on the last basic pay and is payable at the rate of one month's basic pay for every completed
year of service up to ten years of service, one and half months basic pay for every completed year of service up to
ffteen years of service and two months basic pay for more than ffteen years of service. Full provision for gratuity
has been made in the accounts for the existing employees based on their years of services with the Company.
2.25.3 Other employees beneft obligation
The Company operates a group life insurance scheme for its permanent employees.
The Company also has real estate loan for its permanent employees. Employees are entitled to real estate loan after
completion of minimum fve years of services with the Company.
2.26 Taxation
Tax expense comprises current and deferred tax.
2.26.1 Deferred tax
The Company accounts for deferred tax as per Bangladesh Accounting Standard (BAS) 12 "Income Taxes". Deferred
tax is provided using the balance sheet method for all temporary timing diferences arising between the tax base of
assets and liabilities and their carrying value for fnancial reporting purposes. Tax rate prevailing at the balance sheet
date is used to determine deferred tax.
2.26.2 Current tax
Provision for current tax is made on the basis of the proft for the year as adjusted for taxation purpose in accordance
with the provision of Income Tax Ordinance, 1984 and amendments made thereto from time to time.
2.27 Impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that
the book value of the assets may not be recovered. Accordingly, the Company estimates the recoverable amount
of the assets. Impairment losses, if any, is recognised in the proft and loss account when the estimated recoverable
amount of an asset is less than its carrying amount.
2.28 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, cash at bank, term deposits and investments in call loan that are
readily convertible to a known amount of cash (with less than three months maturity) and that are subject to an
insignifcant risk of change in value.
2.29 Earnings per share (EPS)
The Company calculates earning per share in accordance with Bangladesh Accounting Standards (BAS) 33
"Earnings Per Share" which has been shown in the face of the Proft and Loss Account and the computation is
stated in note 36.
2.30 Related party disclosure
As per Bangladesh Accounting Standards (BAS) 24 "Related Party Disclosures", parties are considered to be related
if one of the party has the ability to control the other party or exercise signifcant infuence over the other party
in making fnancial and operating decisions. The Company carried out transactions in the ordinary course of
business on an arms length basis at commercial rates with its related parties. Related party disclosures have been
given in note 37.
Annual Report 2012
156
2.31 Determination and presentation of operating segment
As more fully disclosed in note 2.12, the license of the Merchant Banking Operation was transferred to IDLC
Investments Limited (IDLCIL) from the Company on August 16, 2011. Hence, in compliance with the requirement
of statutory regulations of the Bangladesh Securities and Exchange Commission (the "BSEC") , the Company
prepared separate proft and loss account for its separate segment, 'Merchant Banking Operation'. Proft and loss
account of merchant banking operation includes revenue from issue management, underwriting and portfolio
management services and the Company maintains separate books of accounts for the merchant banking
operation as required under the regulations of the BSEC. Proft and loss account of merchant banking operation
and other operation have been prepared in accordance with Bangladesh Accounting Standards (BASs) and
Bangladesh Financial Reporting Standards (BFRSs), and results of its operation has been combined, item by item,
with the fnancial results of the Company.
Compliance with Bangladesh Financial Reporting Standard
As on January 01, 2010, the Company determines and presents operating segments based on information that
is internally provided to the Company's Management Committee (MC), which is the Company's Chief Operating
Decision Maker (CODM). This is due to the adoption of the Bangladesh Financial Reporting Standard (BFRS) 8 "
Operating Segments". Since the adoption of this BFRS only afects presentation and disclosure aspects, there is no
impact on the earning per share.
An operating segment is a component of the Company that engages in business activities from which it may earn
revenue and incur expenses, including revenues and expenses that relate to transactions with the Company's
other components, whose operating results are regularly reviewed by the Company's MC to make decisions about
resources allocated to the segments and assess its performance and for which discrete fnancial information is
available.
Up to August 15, 2011, for the separate fnancial statements , the Company has determined two reportable
segments such as merchant banking and core business and for the consolidated fnancial statements, the
subsidiaries of the Company have been determined to be a separate reportable segment in addition to the other
two segments. Thereafter, for the separate fnancial statements, the Company has one reportable segment which
is core business and for the consolidated fnancial statements, the subsidiaries of the Company ( IDLC Securities
Limited and IDLC Investments Limited) have been determined to be two separate reportable segments in
addition to the core business.
Information about operating segment has been presented in note 34.
2.32 Proposed dividend
Proposed dividend has not been recognised as a liability in the balance sheet in accordance with Bangladesh
Accounting Standards (BAS) 10 "Events After the Balance Sheet Date".
2.33 Events after the balance sheet date
All material events occurring after the balance sheet date has been considered and where necessary, adjusted for
or disclosed in note 42.
2.34 Contingent liabilities and contingent assets
The Company does not recognize contingent liability and contingent asset but discloses the existence of
contingent liability in the fnancial statements. A contingent liability is a probable obligation that arises from past
events whose existence will be confrmed by occurrence or non-occurrence of uncertain future events not within
the control of the Company or a present obligation that is not recognized because outfow of resources is not
likely or obligation cannot be measured reliably.
Annual report 2012
157
2.35 Liquidity statement
The liquidity statement has been prepared in accordance with remaining maturity grouping of Assets and Liabilities
as of the close of the year as per following bases:
a) Balance with other bank and fnancial institutions are on the basis of their maturity term.
b) Investments are on the basis of their residual maturity term.
c) Loans, advances and leases are on the basis of their repayment/maturity schedule
d) Fixed assets are on the basis of their useful lives.
e) Other assets are on the basis of their adjustment terms.
f ) Borrowings from other banks and fnancial institutions as per their maturity/repayment terms.
g) Deposits and other accounts are on the basis of their maturity term and behavioral past trends.
h) Other long term liabilities on the basis of their maturity terms.
i) Other liabilities are on the basis of their settlement terms.
2.36 Allocation to Merchant Banking operation
Indirect expenses have been allocated based on number of employees working in Merchant Banking Division until
separation of business in 2011.
2.37 Status of compliance of Bangladesh Accounting Standards and Bangladesh Financial Reporting Standards.
In preparing the Consolidated Financial Statements and Separate Financial Statements, IDLC applied following BAS
and BFRS:
Name of the BAS BAS No. Status
Presentation of Financial Statements 1 Applied *
Inventories 2 N/A
Cash Flow Statements 7 Applied
Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied
Events after the Balance Sheet Date 10 Applied
Construction Contracts 11 N/A
Income Taxes 12 Applied
Property, Plant and Equipment 16 Applied
Leases 17 Applied
Revenue 18 Applied
Employee Benefts 19 Applied
Accounting for Government Grants and Disclosure of Government Assistance 20 N/A
The Efects of Changes in Foreign Exchange Rates 21 Applied
Borrowing Costs 23 Applied
Related Party Disclosures 24 Applied
Accounting and Reporting by Retirement Beneft Plans 26 N/A
Consolidated and Separate Financial Statements 27 Applied
Investment in Associates 28 N/A
Interests in Joint Ventures 31 N/A
Financial Instruments: Disclosure and Presentation 32 Applied *
Annual Report 2012
158
Name of the BAS BAS No. Status
Earnings per share 33 Applied
Interim Financial Reporting 34 Applied
Impairment of Assets 36 Applied
Provisions, Contingent Liabilities and Contingent Assets 37 Applied
Intangible Assets 38 Applied
Financial Instruments: Recognition and Measurement 39 Applied *
Investment Property 40 N/A
Agriculture 41 N/A
Name of the BFRS BFRS No. Status
Share Base payment 2 N/A
Business combination 3 N/A
Insurance Contracts 4 N/A
Non-current assets held for sale and discontinued operation 5 N/A
Exploration for and Evaluation of Mineral Resources 6 N/A
Financial Instruments: Disclosures 7 Applied *
Operating Segments 8 Applied
N/A=Not Applicable
*As the regulatory requirements difer with the standards, relevant disclosures are made in accordance with
Bangladesh Banks requirements (please see note 2.3).
New and amended standards adopted by the Group and the Company
There are no new standards, amendments to standards and interpretations that are efective for the frst time for
the fnancial year ended 31 December 2012 that have a signifcant impact on the Group and the Company.
New and amended standards and interpretations not yet adopted by the Group and the Company.

A number of new standards, amendments to standards and interpretations are efective for annual periods
beginning from 1 January 2013 or later, and have not been applied in preparing these consolidated and
separate fnancial statements. None of these is expected to have a signifcant efect on the consolidated fnancial
statements of the Group and the Company. Although International Accounting Standards Board (IASB) has
issued a new standard (IFRS 9) along with related amendments to existing standards (IAS/BAS 32, 39) but none
of these have been adopted and/or endorsed locally as BAS/BFRS and as such any possible impact could not be
determined.
2.38 BASEL II & its implementation
To cope with the international best practices and to make the capital more risks sensitive as well as more shock
resilient, guidelines on BASEL Accord for Financial Institutions (BAFI) have been introduced from January 01,
2011 on test basis by the Bangladesh Bank. At the end of test run period, BASEL Accord regime has started and
the guidelines namely "Prudential Guidelines on Capital Adequacy and Market Discipline for Financial Institutions
(CAMD)" have come fully into force from January 01, 2012 with its subsequent supplements/revisions.
Instructions regarding Minimum Capital Requirement (MCR), Adequate Capital, and Disclosure requirement as
stated in these guidelines have to be followed by all FIs for the purpose of statutory compliance.
Annual report 2012
159
As per CDMD guidelines, Financial Institutions should maintain a Capital Adequacy Ratio (CAR) of minimum 10%.
In line with CDMD guideline's requirement, IDLC has already formed BASEL Implementation Unit (BIU) to ensure
timely implementation of BASEL II accord.
2.39 Financial Risk Management
IDLC always concentrates on delivering high value to its stakeholders through appropriate trade of between risk
and return. A well structured and proactive risk management system is in place within the Company to address
risks relating to credit, market, liquidity and operations. In addition to the industry best practices for assessing,
identifying and measuring risks, IDLC also considers guidelines for managing core risks of fnancial instructions
issued by the Country's Central Bank, Bangladesh Bank, vide FID Circular No. 10 dated September 18, 2005 for
management of risks.
Credit Risk
To encounter and mitigate credit risk the company employed " multilayer approval process, policy for maximum
sector and group exposure limit, policy for customers maximum asset exposure limit, mandatory search for
credit report from Credit Information Bureau, looking into payment performance of customer before fnancing,
annual review of clients, adequate insurance coverage for funded assets, vigorous monitoring and follow up
by Special Assets Management Team, strong follow up of compliance of credit policies by Operational Risk
Management Department, taking collateral, seeking external legal opinion, maintaining neutrality in politics and
following arm's length approach in related party transactions, regular review of market situation and industry
exposure etc.
The Credit Evaluation Committee (CEC) regularly meets to review the market and credit risk related to lending
and recommend and implement appropriate measures to counter associated risks. The CEC critically reviews
projects from risk point of view. An independent Credit Risk Management Department is in place, at IDLC, to
scrutinize projects from a risk-weighted point of view and assist the management in creating a high quality credit
portfolio and maximize returns from risk assets.
Market Risk
The Asset Liability Committee (ALCO) of the Company regularly meets to assess the changes in interest rate,
market conditions, carry out asset liability maturity gap analysis, re-pricing of products and thereby takes
efective measures to monitor and control interest rate risk. IDLC has also strong access to money market and
credit lines at a competitive rate through good reputation, strong earnings, fnancial strength and credit rating.
Liquidity Risk
Liquidity requirements are managed on a day-to-day basis by the Treasury Division which is responsible for
ensuring that suf cient funds are available to meet short term obligations, even in a crisis scenario, and for
maintaining a diversity of funding sources. Treasury Division maintains liquidity based on historical requirements,
anticipated funding requirements from operation, current liquidity position, collections from fnancing, available
sources of funds and risks and returns.
Operational Risk
Appropriate internal control measures are in place, at IDLC, to address operational risks. IDLC has also established
an internal control & compliance department (ICCD) to address operational risk and to frame and implement
policies to encounter such risks. This department assesses operational risk across the Company as a whole and
ensures that an appropriate framework exists to identify, assess and mange operational risk. The function of ICCD
is to constant vigilance against leakage of Shareholders value by identify, assess, measure, manage and transfer
operational risk resulting from inadequate or failed internal processes, people and system or from external
events.
Annual Report 2012
160
IDLC Finance Ltd. IDLC Group
2012
Taka
2011
Taka
2012
Taka
2011
Taka
3 Cash
3.1 Cash in hand:
In local currency 151,000 136,000 251,000 246,000
In foreign currency - - - -
151,000 136,000 251,000 246,000
3.2 Balance with Bangladesh Bank in local currency 565,343,055 417,207,356 565,343,055 417,207,356
565,494,055 417,343,356 565,594,055 417,453,356
3.3 Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR)
Cash Reserve Requirement and Statutory Liquidity Reserve have been calculated and maintained in accordance
with Financial Institution Act, 1993 & Financial Institution Regulations 1994 and FID Circular No. 06 dated November
06, 2003 and FID Circular No. 02 dated November 10, 2004.
"Cash Reserve Requirement (CRR) has been calculated at the rate of 2.5% on Total Term Deposits which is preserved
in current account maintained with Bangladesh Bank. 'Total Term Deposit' means Term or Fixed Deposit, Security
Deposit against Lease/Loan and other Term Deposits, received from individuals and institutions (except Banks &
Financial Institutions)"
Statutory Liquidity Reserve (SLR) has been calculated at the rate of 5.0% on total liabilities, including CRR of 2.5% on
Total Term Deposit. SLR is maintained in liquid assets in the form of cash in hand (notes & coin in BDT), balance with
Bangladesh Bank and other banks and Financial Institutions, investment at call, unencumbered treasury bill, prize
bond, savings certifcate & any other assets approved by Bangladesh Bank.
a) Cash Reserve Requirement
Required reserve 512,997,000 415,471,000 512,997,000 415,471,000
Actual reserve maintained 517,251,000 419,894,000 517,251,000 419,894,000
Surplus / (defcit) 4,254,000 4,423,000 4,254,000 4,423,000
b) Statutory Liquidity Reserves
Required reserve (including CRR) 1,394,337,000 1,192,461,000 1,394,337,000 1,192,461,000
Actual reserve maintained (including CRR) (note 3.3.1) 1,488,802,124 1,391,670,530 1,488,802,124 1,391,670,530
Surplus / (defcit) 94,465,124 199,209,530 94,465,124 199,209,530
Total required reserves 1,394,337,000 1,192,461,000 1,394,337,000 1,192,461,000
Actual reserve held 1,488,802,124 1,391,670,530 1,488,802,124 1,391,670,530
Total surplus 94,465,124 199,209,530 94,465,124 199,209,530
3.3.1 Actual reserve maintained (including CRR)
The City Bank Limited 2,731,029 11,134,076 2,731,029 11,134,076
Standard Chartered Bank 47,375,453 12,593,482 47,375,453 12,593,482
Citibank N.A. 42,871,427 52,526,334 42,871,427 52,526,334
Southeast Bank Limited 152,444 55,240,128 152,444 55,240,128
Pubali Bank Limited 75,002 4,762 75,002 4,762
Bank Asia Limited 4,577,382 - 4,577,382 -
Annual report 2012
161
2012
Taka
2011
Taka
2012
Taka
2011
Taka
Prime Bank Limited 1,501,316 52,184

1,501,316 52,184
The Hong Kong and Shanghai Banking Corporation 500,000 359,001 500,000 359,001
State Bank of India 65,683 762,845 65,683 762,845
Dutch Bangla Bank Limited 1,828,873 2,995,254 1,828,873 2,995,254
Bangladesh Bank 487,018,231 418,625,926 487,018,231 418,625,926
International Leasing and Financial Service Limited - 200,000,000 - 200,000,000
LankaBangla Finance Limited - 100,000,000 - 100,000,000
National Bank Limited 105,284 2,148,858 105,284 2,148,858
United Commercial Bank Limited 100,000,000 - 100,000,000 -
Union Capital Limited - 50,000,000 - 50,000,000
Agrani Bank Limited (Call Placement) - 160,000,000 - 160,000,000
Bank Asia Limited - 227,680 - 227,680
EXIM Bank Limited 300,000,000 100,000,000 300,000,000 100,000,000
Jamuna Bank Limited (Call Placement) - 50,000,000 - 50,000,000
Standard Bank Ltd. 200,000,000 150,000,000 200,000,000 150,000,000
Social Islami Bank Limited 300,000,000 - 300,000,000 -
Investment in Bonds - 25,000,000 - 25,000,000
1,488,802,124 1,391,670,530 1,488,802,124 1,391,670,530
4 Balance with other banks and fnancial institutions in Bangladesh
Current deposits in local currency:
Woori Bank limited 56,725 12,300 56,725 12,300
Uttara Bank Limited 44,072 41,815 44,072 41,815
Bank Al- Falah Limited 1,573 2,953 1,573 2,953
National Bank Limited 105,284 62,500 105,284 62,500
Bank Asia Limited 9,307,659 3,029,589 9,307,659 3,029,589
State Bank of India 65,683 2,315,624 65,683 2,315,624
Commercial Bank of Ceylon PLC 5,596,550 1,575,107 6,208,893 1,885,739
The Hong Kong and Shanghai Banking Corporation 5,887,195 888,753 14,277,370 888,753
Citibank N.A (19,098,009) (391,607) (19,098,009) (391,607)
Standard Chartered Bank * (142,166,498) (133,846,442) (94,228,931) 3,098,639
Mutual Trust Bank Limited 666,035 11,435 666,035 11,435
Trust Bank Limited - 3,140 - 3,140
Dutch Bangla Bank Limited 26,210,402 5,521,397 26,210,402 5,521,397
BRAC Bank Limited 13,457,320 3,180,482 13,583,320 3,544,452
Dhaka Bank Limited 304,756 322,536 304,756 322,536
United Commercial Bank Limited 82,874 21,575 82,874 21,575
IDLC Investment Limited 616,854,212 179,961,283 616,854,212 179,961,283
522,552,871 64,431,960 579,618,956 202,051,643
Annual Report 2012
162
2012
Taka
2011
Taka
2012
Taka
2011
Taka
Short-term deposit accounts:
Pubali Bank Limited 75,002 4,285 75,002 4,285
Prime Bank Limited 465,726 30,356 465,726 30,356
BRAC Bank Limited 27,617 27,247 1,973,982 2,216,873
Southeast Bank Limited 18,731,637 11,857,166 18,731,637 11,857,166
Citibank N.A 40,825,118 39,907,181 40,825,118 39,907,181
Standard Chartered Bank (3,792,977) 36,780,614 (2,127,977) 43,996,620
Commercial Bank of Ceylon PLC (97,239) (210,575) 707,829 3,197,231
One Bank Limited - - 197,908,818 154,404,546
Eastern Bank Limited - - 701,301 667,677
57,820,887 90,557,514 260,847,439 258,443,175
Fixed deposits:
International Leasing & Financial Services Limited - 300,000,000 - 300,000,000
LankaBangla Finance Limited - 200,000,000 - 200,000,000
Social Islami Bank Limited 500,000,000 - 500,000,000 -
Mercantile Bank Limited - 100,000,000 - 100,000,000
Southeast Bank Limited 500,000,000 150,000,000 500,000,000 266,200,000
Standard Bank Limited 400,000,000 150,000,000 400,000,000 450,000,000
Union Capital Limited - 50,000,000 - 50,000,000
National Bank Limited - 200,000,000 - 200,000,000
Export Import Bank of Bangladesh Limited 700,000,000 100,000,000 700,000,000 100,000,000
Prime Finance & Investment Limited 100,000,000 - 100,000,000 -
United Commercial Bank Limited 200,000,000 - 200,000,000 -
Trust Bank Limited - - 6,993,358 6,312,597
Standard Chartered Bank - - 28,000,000 -
2,400,000,000 1,250,000,000 2,434,993,358 1,672,512,597
2,980,373,758 1,404,989,474 3,275,459,753 2,133,007,415
* Balance with Standard Chartered Bank includes an amount of tk. 12,763,003 deposit in transit subsequently
cleared by bank and tk. 183,881 Capital market fund.
4.1 Maturity grouping of balance with other banks and fnancial institutions:
Payable on demand 522,552,871 64,431,960 782,645,507 369,937,304
Up to 1 month 957,820,887 640,557,514 957,820,887 640,557,514
Over 1 month but not more than 3 months 1,000,000,000 450,000,000 1,000,000,000 450,000,000
Over 3 months but not more than 6 months 500,000,000 250,000,000 500,000,000 666,200,000
Over 6 months but not more than 1 year - - 34,993,359 6,312,597
Over 1 year but not more than 5 years - - - -
Over 5 years - - -
2,980,373,758 1,404,989,474 3,275,459,753 2,133,007,415
Annual report 2012
163
2012
Taka
2011
Taka
2012
Taka
2011
Taka
5 Money at call and short notice
AB Bank Limited - 410,000,000 - 410,000,000
Jamuna Bank Limited 40,000,000 260,000,000 40,000,000 260,000,000
40,000,000 670,000,000 40,000,000 670,000,000
6 Investments
Government securities: - - - -
Other investments:
Investment in non marketable ordinary shares (Note 6.1) 5,885,700 5,885,700 5,885,700 5,885,700
Investment in preference shares (Note 6.2) 53,805,251 66,120,968 53,805,251 66,120,968
Investment in bonds (Note 6.3) - 25,000,000 - 25,000,000
Investment in marketable securities (Note 6.4) 145,504,427 300,102,207 327,852,972 452,590,074
205,195,378 397,108,875 387,543,923 549,596,742
205,195,378 397,108,875 387,543,923 549,596,742
6.1 Investment in non marketable ordinary shares
No. of Shares
Credit Rating Agency of
Bangladesh Limited 17,198 1,719,800 1,719,800 1,719,800 1,719,800
Dan & Bradstreet Rating Agency
Bangladesh Limited 41,659 4,165,900 4,165,900 4,165,900 4,165,900
5,885,700 5,885,700 5,885,700 5,885,700
6.2 Investment in preference shares
17.5% cumulative redeemable preference shares of
Basic Dredging Company Limited * 20,000,000 20,000,000 20,000,000 20,000,000
STS Holdings Ltd - 11,047,300 - 11,047,300
ECPV Ltd 3,805,251 5,073,668 3,805,251 5,073,668
Fiber @ Home Ltd 30,000,000 30,000,000 30,000,000 30,000,000
53,805,251 66,120,968 53,805,251 66,120,968
Adequate provisions for future losses have been made as per Bangladesh Bank Guidelines.
* "Redemption of the 17.5% cumulative redeemable preference shares of Basic Dredging Company Limited is under
process. Full amount against the shares has been collected and redemption of the shares will be efected after completion
of some legal formalities."
Annual Report 2012
164
2012
Taka
2011
Taka
2012
Taka
2011
Taka
6.3 Investment in bonds
"As per Trust Deed signed between IDLC Finance Limited (IDLC) and Investment Corporation of Bangladesh (ICB), a
Trust named IDLC Securitization Trust 2007-A was formed and IDLC sold lease receivables of Tk. 364,154,897 to the
Trust to issue asset backed securitized zero coupon bonds in December 31, 2007. The Trust issued 50 class A bonds
and 5 class B bonds of Tk. 5,000,000 each of which IDLC purchased all class B bonds bearing coupon rate of 7.75%
per year. All class B bonds are subordinated to class A bonds."
Full amount of investment has been recovered in 2012 .
6.4 Investment in marketable securities
Details of marketable securities are given below:
Name of company
IDLC Finance Ltd.
Market price at the
IDLC Group
Market price at the
No. of
shares
Cost price
Market price
at the end of
the year
No. of shares
Cost price
Market price
at the end of
the year
Taka Taka Taka Taka
Aamra Technologies Limited 264,000 7,499,800 9,688,800 264,000 7,499,800 9,688,800
BD Submarine Cable Co. Ltd. 9,400 1,494,308 1,249,260 34,400 5,407,324 4,571,760
GBB Power Limited 363,650 20,262,896 12,182,275 426,150 23,762,896 14,276,025
Jamuna Bank Limited 35,500 880,768 770,350 65,500 1,622,270 1,421,350
LankaBangla Securities Ltd.* 70,000 9,999,997 9,999,997 70,000 9,999,997 9,999,997
LR Global Bangladesh
Mutual Fund One 5,074,500 50,684,236 50,745,000 5,074,500 50,684,236 50,745,000
Malek Spinning Mills Ltd. 210,000 5,907,554 5,271,000 310,000 8,713,752 7,781,000
Meghna Petroleum Limited 128,960 25,232,257 20,440,160 444,730 85,940,414 70,489,705
NCC Bank Limited 200,250 3,804,043 3,644,550 299,750 5,693,229 5,455,450
One Bank Limited 200,000 4,817,201 4,560,000 319,500 7,692,070 7,284,600
Pioneer Insurance Co. Limited 20,000 1,682,031 1,460,000 101,500 8,248,723 7,409,500
Saiham Cotton Mills Ltd. 130,000 3,728,314 3,679,000 130,000 3,728,314 3,679,000
Titas Gas Transmission and
Distribution Co. Limited 105,000 9,511,022 6,856,500 525,000 46,502,973 34,282,500
Estern Bank Limited - - - 15,000 496,197 475,500
EXIM Bank Limited - - - 23,000 488,518 478,400
Jamuna Oil Company Ltd. - - - 198,900 48,571,195 35,503,650
Navana CNG Limited - - - 60,000 5,971,782 4,788,000
Northern General Insurance
Company Limited - - - 20,500 1,080,494 932,750
R.N. Spinning Mills Limited - - - 120,000 4,738,817 4,092,000
S. Alam Cold Rolled Steels Ltd. - - - 18,500 1,009,969 908,350
145,504,427 130,546,892 327,852,972 274,263,337
* Not listed as on December 31, 2012 and accordingly trading was not started.
All investments in marketable securities are valued on an aggregate portfolio basis, at the lower of cost and market
value, at the balance sheet date.
Market price for securities not listed as on reporting date, has been shown at cost for calculation purpose.
As on December 31, 2012 there was Tk. 53,589,635 gross unrealised loss on consolidated investment in marketable
listed securities and Tk. 14,957,535 gross unrealised loss on investment by IDLC Finance Ltd in marketable securities,
full provision for which has been kept in proft and loss account.
Annual report 2012
165
2012
Taka
2011
Taka
2012
Taka
2011
Taka
6.5 Maturity grouping of investments:
On demand - - - -
Up to 1 month 165,504,427 320,102,207 347,852,972 472,590,074
Over 1 month but not more than 3 months - 25,000,000 - 25,000,000
Over 3 months but not more than 6 months - 11,047,300 - 11,047,300
Over 6 months but not more than 1 year - - - -
Over 1 year but not more than 5 years 33,805,251 35,073,668 33,805,251 35,073,668
Over 5 years 5,885,700 5,885,700 5,885,700 5,885,700
205,195,378 397,108,875 387,543,923 549,596,742
7 Loans, advances and lease
Inside Bangladesh:
Lease receivable (Note 7.1) 5,479,273,618 4,546,936,552 5,479,273,618 4,546,936,552
Long-term fnance (Note 7.2) 11,858,970,546 7,772,386,735 11,858,970,546 7,772,386,735
Real estate fnance (Note 7.3) 8,262,145,340 6,978,998,771 8,262,145,340 6,978,998,771
Car loans (Note 7.4) 408,686,907 385,502,415 408,686,907 385,502,415
Personal loan (Note 7.5) 187,604,529 212,148,367 187,604,529 212,148,367
Short term fnance (Note 7.6) 581,284,033 821,088,462 581,284,033 821,088,462
Loan to IDLC Investments Limited (Note 7.7) 2,946,156,960 3,669,276,020 - -
Loan against deposits (LAD) 822,364,310 771,536,479 822,364,310 771,536,479
Margin loan to portfolio investors (Note 7.8) - - 4,602,653,254 4,726,861,622
Interest Receivable (Note-7.9) 392,196,016 382,325,781 392,196,016 141,644,842
30,938,682,259 25,540,199,582 32,595,178,553 26,357,104,245
Outside Bangladesh - - - -
30,938,682,259 25,540,199,582 32,595,178,553 26,357,104,245
7.1 Lease receivable
Balance at January 1 4,546,936,552 4,106,824,345 4,546,936,552 4,106,824,345
Add: Addition during the year 2,709,636,436 2,365,648,785 2,709,636,436 2,365,648,785
7,256,572,988 6,472,473,130 7,256,572,988 6,472,473,130
Less: Realisation during the year 1,777,299,370 1,920,145,381 1,777,299,370 1,920,145,381
5,479,273,618 4,552,327,749 5,479,273,618 4,552,327,749
Add: Net receivable/(payable) on terminated leases - (5,391,197) - (5,391,197)
Balance at December 31 5,479,273,618 4,546,936,552 5,479,273,618 4,546,936,552
Annual Report 2012
166
2012
Taka
2011
Taka
2012
Taka
2011
Taka
2012 2011
Amount in
Tk.
% of total
Amount in
Tk.
% of total
7.1.1 Aging analysis of lease receivable
Up to one year 2,058,681,777 37.57 1,869,321,388 41.11
Above one year to three years 3,220,387,371 58.77 2,561,959,752 56.34
Above three years to fve years 200,204,470 3.65 115,655,412 2.54
More than fve years - - - -
5,479,273,618 100.00 4,546,936,552 100.00
2012
Taka
2011
Taka
2012
Taka
2011
Taka
7.2 Long-term fnance
Add: Disbursement made during the year 7,732,411,186 7,736,004,331 7,732,411,186 7,736,004,331
15,504,797,921 11,942,985,585 15,504,797,921 11,942,985,585
Less: Realisation during the year 3,645,827,375 4,170,598,850 3,645,827,375 4,170,598,850
7.3 Real estate fnance
This represents loans to individuals, employees under the Company's real estate loan scheme and corporate bodies
for purchase and construction of apartments and homes in urban areas for periods ranging from 5 to 20 years.
Add : Disbursement during the year 2,668,802,925 2,662,610,960 2,668,802,925 2,662,610,960
9,647,801,696 8,267,183,035 9,647,801,696 8,267,183,035
Less : Realisation during the year 1,385,656,356 1,288,184,264 1,385,656,356 1,288,184,264
2012 2011
Amount in
Tk.
%
of total
Amount in
Tk.
%
of total
7.3.1 Aging analysis of real estate fnance
Up to one year 811,315,998 9.82 674,877,107 9.67
Above one year to three years 2,168,681,653 26.25 1,834,536,068 26.29
Above three years to fve years 1,359,189,967 16.45 1,339,243,917 19.19
More than fve years 3,922,957,722 47.48 3,130,341,679 44.85
8,262,145,340 100.00 6,978,998,771 100.00
7.4 Car loans
Balance at January 1 385,502,415 339,287,534 385,502,415 339,287,534
Add : Disbursement during the year 163,793,359 211,510,053 163,793,359 211,510,053
549,295,774 550,797,587 549,295,774 550,797,587
Less : Realisation during the year 140,608,867 165,295,172 140,608,867 165,295,172
Balance at December 31 408,686,907 385,502,415 408,686,907 385,502,415
Annual report 2012
167
2012
Taka
2011
Taka
2012
Taka
2011
Taka
7.5 Personal loan
Add : Disbursement during the year 45,895,694 166,911,638 45,895,694 166,911,638
258,044,061 379,186,420 258,044,061 379,186,420
Less : Realisation during the year 70,439,532 167,038,053 70,439,532 167,038,053
7.6 Short term fnance
Factoring of account receivable 581,284,033 803,809,577 581,284,033 803,809,577
Inter Corporate Deposits (ICD) - 17,278,885 - 17,278,885
581,284,033 821,088,462 581,284,033 821,088,462
7.7 Loan to IDLC Investments Limited
Balance at January 1 3,669,276,020 - - -
Add : Disbursement during the year 4,706,100,000 9,771,968,921 - -
8,375,376,020 9,771,968,921 - -
Less : Realisation during the year 5,429,219,060 6,102,692,901 - -
Balance at December 31 2,946,156,960 3,669,276,020 - -
7.8 Margin loan to portfolio investors
Balance at January 1 - - 4,726,861,622 4,954,568,813
Add : Disbursement during the year - - 6,137,657,569 2,300,371,366
- - 10,864,519,191 7,254,940,179
Less : Realisation during the year - - 6,261,865,937 2,528,078,557
Balance at December 31 - - 4,602,653,254 4,726,861,622
Margin loan to portfolio investors are provided by the subsidiaries of the Company as part of thier normal business
activities and the Group considers this as having similiar characteristics of retail/personal lending. Based on
detailed review, the Group note that shortfall, if any on individual clients portfolio and margin lending exposure
are temporary in nature and any potential shortfall is expected to be recouped in near future. Moreover, the Group
has also continuing its recovery eforts by requesting those clients to bring in additional fund to cover shortfall.
Nevertheless, the Group is closely monitoring this matter and if it become obvious that additional provision is
required it shall be provided for in due course.
7.9 Interest receivables
Lease receivable 86,953,350 22,854,110 86,953,350 22,854,110
Long-term fnance 134,978,100 38,736,511 134,978,100 38,736,511
Real estate fnance 103,630,938 46,166,511 103,630,938 46,166,511
Car loan 5,105,093 2,379,214 5,105,093 2,379,214
Personal loan 2,765,873 1,144,087 2,765,873 1,144,087
Loan to IDLC Investments Limited - 240,680,939 - -
Loan against deposits (LAD) 58,762,662 30,364,409 58,762,662 30,364,409
392,196,016 382,325,781 392,196,016 141,644,842
7.10 Net loans, advances and leases
Gross performing loans, advances and leases (Note-7) 30,938,682,259 25,540,199,582 32,595,178,553 26,357,104,245
Less:
Non-performing loans, advances and leases (Note-7.15(x)(a)) 645,161,451 593,804,072 645,161,451 593,804,072
Interest suspense (Note-12.7) 67,552,869 74,969,334 67,552,869 74,969,334
Provision for loans and advances / investments (Note-12.8) 863,001,320 918,907,258 901,633,421 965,482,382
1,575,715,640 1,587,680,664 1,614,347,741 1,634,255,788
29,362,966,619 23,952,518,918 30,980,830,812 24,722,848,457
Annual Report 2012
168
2012
Taka
2011
Taka
2012
Taka
2011
Taka
7.11 Residual maturity grouping of loans, advances and leases
Repayable on demand - - - -
Over 1 month but not more than 3 months 3,007,828,002 2,198,907,620 3,007,828,002 1,958,226,681
Over 3 months but not more than 1 year 9,277,029,947 9,824,984,843 10,933,526,241 10,882,570,445
Over 1 year but not more than 5 years 14,707,216,331 9,777,455,139 14,707,216,331 9,777,455,139
Over 5 years 3,946,607,979 3,738,851,980 3,946,607,979 3,738,851,980
30,938,682,259 25,540,199,582 32,595,178,553 26,357,104,245
7.12 Loans, advances and lease on the basis of signifcant concentration
a) Loans, advances and lease to the institutions in
which Directors have interest 46,834,633 24,590,039 46,834,633 24,590,039
b) Loans, advances and lease to Chief Executive and
other senior executives 46,495,074 25,244,256 46,495,074 25,244,256
c) Loans, advances and lease to customer groups:
i) Real estate fnance 7,319,375,579 6,570,349,922 7,319,375,579 6,570,349,922
ii) Car loan 413,792,000 387,881,629 413,792,000 387,881,629
iii) Personal loan 183,012,118 211,481,052 183,012,118 211,481,052
iv) Loan against deposits (LAD) 880,047,285 801,900,888 880,047,285 801,900,888
v) Small and medium enterprises 8,554,155,722 6,390,461,921 8,554,155,722 6,390,461,921
vi) Special program loan (BB refnancing scheme) 1,823,024,032 406,292,507 1,823,024,032 406,292,507
vii) Staf loan 182,630,518 101,797,464 182,630,518 101,797,464
viii) Industrial loans, advances and leases (Note- 7.12 (d)) 7,915,701,510 6,710,242,945 7,915,701,510 6,710,242,945
ix) Other loans and advances 3,573,613,788 3,909,956,959 5,230,110,082 4,726,861,622
30,845,352,552 25,490,365,287 32,501,848,846 26,307,269,950
30,938,682,259 25,540,199,582 32,595,178,553 26,357,104,245
d) Details of Industrial loans, advances and leases
i) Agricultural industries 269,512,753 36,812,899 269,512,753 36,812,899
ii) Textiles, apparels & accessories 1,545,178,087 1,279,123,607 1,545,178,087 1,279,123,607
iii) Food and beverage 873,260,755 1,132,320,473 873,260,755 1,132,320,473
iv) Pharmaceuticals 1,011,114,001 738,082,753 1,011,114,001 738,082,753
v) Leather & leather products, chemicals 280,478,988 148,064,097 280,478,988 148,064,097
vi) Power, energy & engineering 756,407,302 887,829,530 756,407,302 887,829,530
vii) Real estate & home appliances, cement, ceramics 685,007,055 567,340,768 685,007,055 567,340,768
viii) IT & services 1,307,591,003 1,239,126,251 1,307,591,003 1,239,126,251
ix) Transportation 281,881,176 327,579,331 281,881,176 327,579,331
x) Other industries 905,270,390 353,963,236 905,270,390 353,963,236
7,915,701,510 6,710,242,945 7,915,701,510 6,710,242,945
Annual report 2012
169
2012
Taka
2011
Taka
2012
Taka
2011
Taka
7.13 Loans, advances and leases -geographical location-wise
Inside Bangladesh:
Urban
Dhaka 24,864,204,308 21,711,461,571 25,221,236,661 21,319,895,790
Chittagong 3,517,234,393 2,516,618,829 4,473,442,303 3,422,281,238
Bogra 562,388,149 392,964,181 562,388,149 392,964,181
Sylhet 507,865,930 348,907,645 851,121,961 651,715,681
Savar 323,233,816 179,239,035 323,233,816 179,239,035
Comilla 434,062,397 160,870,095 434,062,397 160,870,094
Jessore 237,376,859 - 237,376,859 -
Narsingdi 492,316,407 230,138,226 492,316,407 230,138,226
30,938,682,259 25,540,199,582 32,595,178,553 26,357,104,245
Outside Bangladesh: - - - -
30,938,682,259 25,540,199,582 32,595,178,553 26,357,104,245
7.14 Details of large loan / investments
There were no clients with outstanding amount and classifed loans / investments exceeding 15% of total capital of
the fnancial institution. Total capital of the fnancial institution was Taka 3,809.72 million as at 31 December 2012
(Tk 3,220.52 million in 2011)
7.15 Particulars of loans, advances and leases
i) Loans, advances and leases considered good in
respect of which the fnancial institution is fully
secured 12,647,715,129 15,372,648,655 14,304,211,423 16,189,553,318
ii) Loans, advances and leases considered good
against which the fnancial institution holds
no security other than the debtors' personal
guarantee

14,467,623,730 7,775,030,409 14,467,623,730 7,775,030,409
iii) Loans, advances and leases considered good
secured by the personal undertaking of one or
more parties in addition to the personal guarantee
of the debtors 3,823,343,400

2,392,520,518 3,823,343,400 2,392,520,518
30,938,682,259 25,540,199,582 32,595,178,553 26,357,104,245
iv) Loans, advances and leases adversely classifed;
provision not maintained there against - - - -
v) Loans, advances and leases due by directors or
of cers of the fnancial institution or any of them
either separately or jointly with any other persons
[Note-7.12 (b) & c (vii)] 229,125,592 127,041,720 229,125,592 127,041,720
Annual Report 2012
170
2012
Taka
2011
Taka
2012
Taka
2011
Taka
vi) Loans, advances and leases due from companies
or frms in which the directors of the fnancial
institution have interest as directors, partners or
managing agents or in case of private companies,
as members 46,834,633 24,590,039 46,834,633 24,590,039
vii) Maximum total amount of advances including
temporary advances made at any time during
the year to directors or managers or of cers of
the fnancial institution or any of them either
separately or jointly with any other person. 229,125,592 127,041,720 229,125,592 127,041,720
viii) Maximum total amount of advances including
temporary advances granted during the year to
the companies or frms in which the directors of
the fnancial institution have interest as directors,
partners or managing agents or in the case of
private companies, as member 46,834,633 24,590,039 46,834,633 24,590,039
ix) Due from bank and fnancial institutions 320,432,189 593,808,393 320,432,189 593,808,393
x) Classifed loans, advances and leases
a) Classifed loans, advances and leases on which
interest has not been charged (Note-7.16) 645,161,451 593,804,072 645,161,451 593,804,072
b) Provision on doubtful loans, advances and leases 123,875,471 152,713,454 123,875,471 152,713,454
Provision on bad loans, advances and leases 439,108,104 535,842,220 439,108,104 535,842,220
Total specifc provisions 562,983,575 688,555,674 601,615,675 735,130,797
c) Amount of written of loans, advances and leases 156,792,018 - 156,792,018 -
Total amount realised against loans and
leases previously written of 55,949,813 40,735,413 55,949,813 40,735,413
d) Provision kept against loans and advances
classifed as bad debts 439,108,104 535,842,220 439,108,104 535,842,220
e) Interest credited to Interest Suspense
Account (Note-12.7) 67,552,869 74,969,334 67,552,869 74,969,334
xi) Cumulative amount of written of loans,
advances and leases
Opening Balance 125,844,612 125,844,612 125,844,612 125,844,612
Amount written of during the year 156,792,018 - 156,792,018 -
282,636,630 125,844,612 282,636,630 125,844,612
The amount of written of loans, advances and
leases for which law suits have been fled 728,105,601 195,378,391 728,105,601 195,378,391
Annual report 2012
171
2012
Taka
2011
Taka
2012
Taka
2011
Taka
7.16 Classifcation of loans, advances and leases
Unclassifed:
Standard including staf loan 29,982,451,030 24,610,441,716 29,982,451,030 24,610,441,716
Special mention account (SMA) 311,069,778 335,953,794 311,069,778 335,953,794
30,293,520,808 24,946,395,510 30,293,520,808 24,946,395,510
Classifed:
Sub-standard 165,674,157 75,884,803 165,674,157 75,884,803
Doubtful 138,665,042 56,819,392 138,665,042 56,819,392
Bad / Loss 340,822,252 461,099,877 340,822,252 461,099,877
645,161,451 593,804,072 645,161,451 593,804,072
30,938,682,259 25,540,199,582 30,938,682,259 25,540,199,582
7.17 Particulars of required provision for loans, advances and leases as per Bangladesh Bank regulations
Status
Base
for
provision
Rate
(%)
General provision
Loans and leases (Excluding SMA) 29,982,447,517 1% 299,824,475 246,104,417 299,824,475 246,104,417
Special mention account (SMA) 293,128,434 5% 14,656,422 15,688,166 14,656,422 15,688,166
314,480,897 261,792,583 314,480,897 261,792,583
Specifc provision
Sub-standard 112,856,556 20% 22,571,311 10,117,546 22,571,311 10,117,546
Doubtful 101,488,203 50% 50,744,102 24,253,503 50,744,102 24,253,503
Bad / Loss 295,534,857 100% 295,534,857 444,829,692 295,534,857 444,829,692
368,850,270 479,200,741 368,850,270 479,200,741
Required provision for loans, advances and leases 683,331,167 740,993,324 683,331,167 740,993,324
Required provision for diminution in value of investments 14,957,970 52,976,356 53,590,070 99,551,479
Total provision required 698,289,137 793,969,680 736,921,237 840,544,803
Total provision maintained (Note - 2.23 & 12.8) 863,001,320 918,907,258 901,633,421 965,482,382
Excess / (short) provision at 31 December 164,712,183 124,937,578 164,712,184 124,937,579
Annual Report 2012
172
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Annual report 2012
173
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1

T
a
k
a

T
a
k
a

T
a
k
a

T
a
k
a

T
a
k
a

T
a
k
a

T
a
k
a

T
a
k
a

T
a
k
a

F
r
e
e

h
o
l
d

a
s
s
e
t
s
:
L
a
n
d

2
6
,
9
5
8
,
4
7
0

-

-

2
6
,
9
5
8
,
4
7
0

-

-

-

-

-

2
6
,
9
5
8
,
4
7
0

B
u
i
l
d
i
n
g

5
6
,
5
3
0
,
0
0
0

-

-

5
6
,
5
3
0
,
0
0
0

2
.
5
0

6
,
3
5
9
,
6
2
5

1
,
4
1
3
,
2
5
0

-

7
,
7
7
2
,
8
7
5

4
8
,
7
5
7
,
1
2
5

F
u
r
n
i
t
u
r
e

a
n
d

F
i
x
t
u
r
e
s

3
0
,
4
2
3
,
2
1
2

8
,
4
4
2
,
2
5
8

(
3
,
8
8
4
,
0
3
3
)
3
4
,
9
8
1
,
4
3
7

1
2
.
5
0

9
,
8
1
3
,
4
5
3

4
,
0
7
8
,
9
8
8

(
1
,
0
2
7
,
5
0
8
)
1
2
,
8
6
4
,
9
3
3

2
2
,
1
1
6
,
5
0
4

E
l
e
c
t
r
i
c
a
l

e
q
u
i
p
m
e
n
t

3
5
,
7
8
8
,
9
4
1

9
,
7
4
6
,
2
4
0

(
4
,
3
0
2
,
0
8
6
)
4
1
,
2
3
3
,
0
9
5

2
0
.
0
0

1
7
,
4
0
3
,
1
0
2

6
,
4
4
5
,
4
3
9

(
1
,
4
5
0
,
9
5
6
)
2
2
,
3
9
7
,
5
8
5

1
8
,
8
3
5
,
5
1
0

C
u
r
t
a
i
n

a
n
d

c
a
r
p
e
t
s

1
,
5
8
4
,
5
3
8

5
7
7
,
6
2
6

(
3
4
6
,
0
4
6
)
1
,
8
1
6
,
1
1
8

3
3
.
3
3

9
3
9
,
6
7
0

5
1
8
,
5
8
2

(
1
9
2
,
0
2
1
)
1
,
2
6
6
,
2
3
1

5
4
9
,
8
8
7

O
f

c
e

e
q
u
i
p
m
e
n
t

4
9
,
4
7
4
,
5
6
3

1
1
,
3
5
3
,
3
0
7

(
6
,
1
8
9
,
8
5
9
)
5
4
,
6
3
8
,
0
1
1

2
0
.
0
0

2
3
,
6
4
2
,
7
5
5

1
3
,
7
1
9
,
3
6
6

(
1
,
8
7
5
,
0
2
4
)
3
5
,
4
8
7
,
0
9
7

1
9
,
1
5
0
,
9
1
4

O
f

c
e

d
e
c
o
r
a
t
i
o
n

4
3
,
8
3
0
,
0
5
6

1
4
,
8
5
9
,
6
3
4

(
8
,
0
8
9
,
2
9
6
)
5
0
,
6
0
0
,
3
9
4

2
0
.
0
0

2
0
,
0
3
2
,
7
5
5

7
,
8
7
9
,
4
9
2

(
1
,
3
3
2
,
0
2
6
)
2
6
,
5
8
0
,
2
2
1

2
4
,
0
2
0
,
1
7
3

C
o
m
p
u
t
e
r
s

4
5
,
4
8
8
,
2
9
1

1
4
,
8
6
5
,
5
6
0

(
9
,
7
2
7
,
8
2
2
)
5
0
,
6
2
6
,
0
2
9

2
0
.
0
0

2
6
,
2
4
6
,
8
6
7

1
,
7
3
6
,
8
2
1

(
5
,
6
6
6
,
5
8
1
)
2
2
,
3
1
7
,
1
0
7

2
8
,
3
0
8
,
9
2
2

S
o
f
t
w
a
r
e

1
0
,
0
3
8
,
5
1
0

4
3
5
,
0
4
8

(
4
0
0
,
0
0
0
)
1
0
,
0
7
3
,
5
5
8

3
3
.
3
3

9
,
6
1
0
,
6
3
3

4
3
9
,
8
0
5

(
3
9
9
,
9
9
5
)
9
,
6
5
0
,
4
4
3

4
2
3
,
1
1
5

T
e
l
e
p
h
o
n
e

a
n
d

t
e
l
e
x

6
,
0
5
3
,
1
6
3

2
,
1
2
7
,
5
4
9

(
1
,
6
4
4
,
3
0
7
)
6
,
5
3
6
,
4
0
5

3
3
.
3
3

3
,
5
6
8
,
6
9
4

1
,
2
2
2
,
1
8
2

(
8
4
7
,
6
1
3
)
3
,
9
4
3
,
2
6
3

2
,
5
9
3
,
1
4
2

M
o
t
o
r

v
e
h
i
c
l
e
s

8
2
,
2
1
5
,
8
8
4

5
7
,
0
6
0
,
2
6
7

(
2
1
,
2
2
2
,
4
3
7
)
1
1
8
,
0
5
3
,
7
1
4

2
5
.
0
0

3
5
,
5
9
4
,
0
9
4

2
7
,
3
3
9
,
4
2
7

(
1
2
,
3
9
6
,
0
1
8
)
5
0
,
5
3
7
,
5
0
3

6
7
,
5
1
6
,
2
1
1

3
8
8
,
3
8
5
,
6
2
8

1
1
9
,
4
6
7
,
4
8
9

(
5
5
,
8
0
5
,
8
8
6
)
4
5
2
,
0
4
7
,
2
3
1

1
5
3
,
2
1
1
,
6
4
8

6
4
,
7
9
3
,
3
5
2

(
2
5
,
1
8
7
,
7
4
2
)
1
9
2
,
8
1
7
,
2
5
8

2
5
9
,
2
2
9
,
9
7
3

L
e
a
s
e

h
o
l
d

a
s
s
e
t
s
:
M
o
t
o
r

v
e
h
i
c
l
e
s

2
4
,
8
7
2
,
0
3
7

-

(
2
1
,
1
3
4
,
6
2
4
)
3
,
7
3
7
,
4
1
3

2
5
.
0
0

2
3
,
3
1
2
,
8
8
7

7
6
8
,
6
0
0

(
2
0
,
8
2
1
,
2
6
8
)
3
,
2
6
0
,
2
1
9

4
7
7
,
1
9
4

T
o
t
a
l

2
0
1
1
4
1
3
,
2
5
7
,
6
6
5

1
1
9
,
4
6
7
,
4
8
9

(
7
6
,
9
4
0
,
5
1
0
)
4
5
5
,
7
8
4
,
6
4
4

1
7
6
,
5
2
4
,
5
3
5

6
5
,
5
6
1
,
9
5
2

(
4
6
,
0
0
9
,
0
1
0
)
1
9
6
,
0
7
7
,
4
7
7

2
5
9
,
7
0
7
,
1
6
7

Annual Report 2012
174
8
.
1
A
l
l
o
c
a
t
i
o
n

o
f

d
e
p
r
e
c
i
a
t
i
o
n

c
h
a
r
g
e
d

(
n
o
t
e

2
.
3
6
)
D
e
p
r
e
c
i
a
t
i
o
n

c
h
a
r
g
e
d

d
u
r
i
n
g

t
h
e

y
e
a
r

h
a
s

b
e
e
n

a
l
l
o
c
a
t
e
d

a
s

f
o
l
l
o
w
s
:

2
0
1
2

2
0
1
1

T
a
k
a

T
a
k
a

M
a
i
n

O
p
e
r
a
t
i
o
n

8
7
,
5
8
7
,
1
8
2

6
2
,
4
3
2
,
3
7
5

M
e
r
c
h
a
n
t

B
a
n
k

O
p
e
r
a
t
i
o
n

-

3
,
1
2
9
,
5
7
7

8
7
,
5
8
7
,
1
8
2

6
5
,
5
6
1
,
9
5
2

8
.
2
D
e
t
a
i
l
s

o
f

d
i
s
p
o
s
a
l
s
/
a
d
j
u
s
t
m
e
n
t
s

:
A
s
s
e
t

c
a
t
e
g
o
r
y
C
o
s
t

A
c
c
u
m
u
l
a
t
e
d

d
e
p
r
e
c
i
a
t
i
o
n

B
o
o
k

v
a
l
u
e

S
a
l
e

p
r
i
c
e
/

a
d
j
u
s
t
m
e
n
t

P
r
o
f

t
/
(
l
o
s
s
)

o
n

d
i
s
p
o
s
a
l

M
o
d
e

o
f

d
i
s
p
o
s
a
l

B
u
y
e
r

T
a
k
a

T
a
k
a

T
a
k
a

T
a
k
a

T
a
k
a

F
r
e
e

h
o
l
d

a
s
s
e
t
s

:
F
u
r
n
i
t
u
r
e

a
n
d

F
i
x
t
u
r
e
s

5
0
,
0
0
0

(
3
2
,
8
1
2
)

1
7
,
1
8
8

1
7
,
1
8
8

-

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

E
m
p
l
o
y
e
e
s
/
O
u
t
s
i
d
e
r

E
l
e
c
t
r
i
c
a
l

e
q
u
i
p
m
e
n
t

2
5
7
,
9
0
0

(
1
5
2
,
0
5
3
)

1
0
5
,
8
4
7

1
0
7
,
0
1
4

1
,
1
6
7

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

E
m
p
l
o
y
e
e
s
/
O
u
t
s
i
d
e
r

C
u
r
t
a
i
n

a
n
d

c
a
r
p
e
t
s

1
0
0
,
0
0
0

(
7
9
,
1
5
9
)

2
0
,
8
4
1

3
0
,
5
6
3

9
,
7
2
2

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

E
m
p
l
o
y
e
e
s

O
f

c
e

d
e
c
o
r
a
t
i
o
n

-

-

-

-

-

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

O
u
t
s
i
d
e
r
s

O
f

c
e

e
q
u
i
p
m
e
n
t

7
2
5
,
9
1
2

(
6
5
0
,
2
0
1
)

7
5
,
7
1
1

3
2
5
,
0
0
0

2
4
9
,
2
8
9

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

E
m
p
l
o
y
e
e
s
/
O
u
t
s
i
d
e
r

C
o
m
p
u
t
e
r
s

1
6
4
,
0
0
0

(
9
5
,
1
6
2
)

6
8
,
8
3
8

7
9
,
3
3
8

1
0
,
5
0
0

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

A
d
j
u
s
t
e
d

S
o
f
t
w
a
r
e

-

-

-

-

-

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

O
u
t
s
i
d
e
r
s

T
e
l
e
p
h
o
n
e

a
n
d

t
e
l
e
x

1
2
2
,
2
5
0

(
8
9
,
4
5
6
)

3
2
,
7
9
4

3
8
,
2
6
1

5
,
4
6
7

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

E
m
p
l
o
y
e
e
s
/
O
u
t
s
i
d
e
r

M
o
t
o
r

v
e
h
i
c
l
e
s

1
3
,
9
0
2
,
0
0
0

(
1
0
,
1
1
4
,
1
1
1
)

3
,
7
8
7
,
8
8
9

6
,
7
1
1
,
4
8
0

2
,
9
2
3
,
5
9
1

A
s

p
e
r

p
o
l
i
c
y

o
f

t
h
e

C
o
m
p
a
n
y

O
u
t
s
i
d
e
r
s

1
5
,
3
2
2
,
0
6
2

(
1
1
,
2
1
2
,
9
5
4
)

4
,
1
0
9
,
1
0
8

7
,
3
0
8
,
8
4
4

3
,
1
9
9
,
7
3
6

L
e
a
s
e

h
o
l
d

a
s
s
e
t
s
:
M
o
t
o
r

v
e
h
i
c
l
e
s

-

-

-

-

-

T
o
t
a
l

2
0
1
2
1
5
,
3
2
2
,
0
6
2

(
1
1
,
2
1
2
,
9
5
4
)

4
,
1
0
9
,
1
0
8

7
,
3
0
8
,
8
4
4

3
,
1
9
9
,
7
3
6

Annual report 2012
175
8
(
a
)
C
o
n
s
o
l
i
d
a
t
e
d

F
i
x
e
d

a
s
s
e
t
s

i
n
c
l
u
d
i
n
g

l
a
n
d
,

b
u
i
l
d
i
n
g
,

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3

Annual Report 2012
176
C
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s
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d

F
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Annual report 2012
177
2012
Taka
2011
Taka
2012
Taka
2011
Taka
9 Other assets
Investment in subsidiary companies
(Note - 9.1) 449,999,800 449,999,800 - -
Accounts receivable (Note - 9.2) 41,631,463 190,085,849 253,398,972 431,847,381
Advances, deposits and prepayments
(Note - 9.3) 53,463,403 143,616,562 131,369,076 192,197,563
Inter - company receivables (Note - 9.4) 38,536,581 17,541,473 - -
Deferred tax asset (Note - 9.5) 29,015,042 28,223,164 44,814,992 38,963,459
DSE & CSE membership at cost (Note - 9.6) - - 18,676,000 18,676,000
612,646,289 829,466,848 448,259,040 681,684,403
9.1 Investment in subsidiary companies
IDLC Securities Limited (Note- 9.1.1) 49,999,900 49,999,900 - -
IDLC Investments Limited (Note- 9.1.2) 399,999,900 399,999,900 - -
449,999,800 449,999,800 - -
9.1.1 Out of the total of 4,000,000 ordinary shares issued and paid up, IDLC Finance Limited holds 3,999,992
(including bonus shares issued in 2008, 2009 and 2010) ordinary shares of Tk 100 each.
9.1.2 Out of the total of 4,000,000 ordinary shares issued and paid up, IDLC Finance Limited holds 3,999,999 ordinary
shares of Tk 100 each.
9.2 Accounts receivable
Interest receivable - treasury 26,615,417 49,316,944 26,615,417 49,316,944
Other receivables 15,016,046 140,768,905 226,783,555 382,530,437
41,631,463 190,085,849 253,398,972 431,847,381
9.3 Advances, deposits and prepayments
Deposits and prepayments 1,847,309 101,191,204 30,624,586 147,911,355
Advance against expenses 51,616,094 42,425,358 100,744,490 44,286,208
53,463,403 143,616,562 131,369,076 192,197,563
Advances, deposits and prepayments are considered good but not secured by collateral.
9.4 Inter - company receivables
This represents receivables from subsidiary companies.
IDLC Securities Limited 12,991,774 647,932 - -
IDLC Investments Limited 25,544,807 16,893,541 - -
38,536,581 17,541,473 - -
Annual Report 2012
178
2012
Taka
2011
Taka
2012
Taka
2011
Taka
9.5 Deferred tax
Deferred tax has been calculated based on deductible/taxable temporary diference arising due to diference in
the carrying amount of the assets and its tax base in accordance with the provision of Bangladesh Accounting
Standard (BAS) 12 "Income Taxes".
Deferred tax liability is arrived at as follows:
IDLC Finance Ltd. Subsidiaries
Carrying
amount at
balance
sheet
Tax base
(Taxable)/
deductible
temporary
diference
Carrying
amount at
balance
sheet
Tax base
(Taxable)/
deductible
temporary
diference
Taka Taka Taka Taka Taka Taka
Assets:
Fixed assets net of
depreciation as on
December 31, 2012 378,821,573 328,742,389 (50,079,184) - - -
Total 378,821,573 328,742,389 (50,079,184) - - -
Assets:
Fixed assets net of
depreciation as on
December 31, 2011 232,748,697 219,775,513 (12,973,184) - - -
Total 232,748,697 219,775,513 (12,973,184) - - -
Applicable tax rate 42.50%
Deferred tax liability as on December 31, 2012 (21,283,653) -
Deferred tax liability as on December 31, 2011 (5,513,603) -
Deferred tax expenses accounted for during the year (15,770,050) -
Deferred tax asset is arrived at as follows:
Carrying
amount at
balance
sheet
Tax base
(Taxable)/
deductible
temporary
diference
Carrying
amount at
balance
sheet
Tax base
(Taxable)/
deductible
temporary
diference
2012
Assets:
Fixed assets net of
depreciation - - - 63,340,467 71,987,198 8,646,731
Total - - - 63,340,467 71,987,198 8,646,731
Annual report 2012
179
Carrying
amount at
balance
sheet
Tax base
(Taxable)/
deductible
temporary
diference
Carrying
amount at
balance
sheet
Tax base
(Taxable)/
deductible
temporary
diference
Liabilities:
Employee gratuity as
on December 31, 2012 65,875,650 - 65,875,650 7,662,402 - 7,662,402
Total 65,875,650 - 65,875,650 7,662,402 - 7,662,402
Loss on sale of
secondary shares 10,178,903 - 10,178,903 96,840,253 96,840,253
Total 10,178,903 - 10,178,903 96,840,253 - 96,840,253
Grand Total 76,054,553 - 76,054,553 104,502,655 - 104,502,655
2011
Assets:
Fixed assets net of
depreciation - - - 94,875,475 91,495,416 (3,380,059)
Total - - - 94,875,475 91,495,416 (3,380,059)
Liabilities:
Employee gratuity as
on December 31, 2011 55,656,128 - 55,656,128 4,931,643 - 4,931,643
Total 55,656,128 - 55,656,128 4,931,643 - 4,931,643
Loss on sale of
secondary shares
45,693,093 - 45,693,093 101,584,509 - 101,584,509
Total 45,693,093 - 45,693,093 101,584,509 - 101,584,509
Grand Total 101,349,221 - 101,349,221 106,516,152 - 106,516,152
Applicable tax rate for employees' gratuity 42.50% 37.50%
Applicable tax rate for loss on sale of secondary shares 10.00% 10.00%
Deferred tax asset as on December 31, 2012 29,015,042 15,799,950
Deferred tax asset as on December 31, 2011 28,223,164 10,740,295
Deferred tax income accounted for during the year 791,878 5,059,655
Net deferred tax (expense)/income (14,978,172) 5,059,655
Consolidated deferred tax expense was Tk. 9,918,517 which includes Tk. 14,978,172 for deferred tax expense of
IDLC Finance Ltd, Tk. 4,353,711 & Tk. 705,944 for deferred tax income of IDLC Secturities Ltd & IDLC Investment
Ltd respectively.
Annual Report 2012
180
2012
Taka
2011
Taka
2012
Taka
2011
Taka
9.6 DSE & CSE membership at cost
DSE membership at cost - - 15,225,000 15225000
CSE membership at cost - - 3,451,000 3451000
- - 18,676,000 18,676,000
10 Borrowings from other banks, fnancial institutions
Inside Bangladesh (Note- 10.1) 4,333,821,600 4,565,821,153 4,333,821,600 4,565,821,153
Outside Bangladesh - - - -
4,333,821,600 4,565,821,153 4,333,821,600 4,565,821,153
10.1 Inside Bangladesh
Secured long term loans:
Bond and Debenture:
Mutual Trust Bank Ltd. 12,500,000 37,500,000 12,500,000 37,500,000
Dhaka Bank Ltd. 6,250,000 18,750,000 6,250,000 18,750,000
Prime Bank Limited 12,500,000 37,500,000 12,500,000 37,500,000
Mercantile Bank Ltd. 12,500,000 37,500,000 12,500,000 37,500,000
43,750,000 131,250,000 43,750,000 131,250,000
Long-term loans:
United Commercial Bank Ltd. - 100,000,000 - 100,000,000
Prime Bank Ltd. 266,250,000 393,750,000 266,250,000 393,750,000
Pubali Bank Ltd. - 10,000,000 - 10,000,000
Commercial Bank of Ceylon PLC 297,000,000 24,000,000 297,000,000 24,000,000
Bank Al-Falah Ltd. 3,000,000 20,000,000 3,000,000 20,000,000
Uttara Bank Ltd. 141,666,667 83,333,333 141,666,667 83,333,333
Trust Bank Ltd. - 165,000,000 - 165,000,000
Woori Bank 148,180,000 222,270,000 148,180,000 222,270,000
856,096,667 1,018,353,333 856,096,667 1,018,353,333
Total secured long-term loans 899,846,667 1,149,603,333 899,846,667 1,149,603,333
Unsecured long-term loans
Bond and Debenture:
Sadharan Bima Corporation 140,000,000 200,000,000 140,000,000 200,000,000
Annual report 2012
181
2012
Taka
2011
Taka
2012
Taka
2011
Taka
Long-term loans:
Kreditanstalt fr Wiederaufbau (KfW) 120,247,931 135,250,277 120,247,931 135,250,277
The Hong Kong & Shanghai
Banking Corporation Ltd. 6,629,891 12,019,936 6,629,891 12,019,936
Bangladesh Bank (Small Enterprise
Refnancing Program) 1,423,715,479 749,289,350 1,423,715,479 749,289,350
Bangladesh Bank (Home Loan
Refnancing Program) 866,617,830 927,637,302 866,617,830 927,637,302
Bangladesh Bank (Agro Loan
Refnancing Program) 247,477,776 63,000,000 247,477,776 63,000,000
Bank Asia Ltd. - 32,795,606 - 32,795,606
IPFF 79,286,026 85,384,952 79,286,026 85,384,952
Total unsecured long-term loan 2,883,974,933 2,205,377,423 2,883,974,933 2,205,377,423
Short-term and Call loans:
Short-term loans
Citi Bank N.A. 400,000,000 600,000,000 400,000,000 600,000,000
Commercial Bank of Ceylon PLC - 115,840,397 - 115,840,397
Export Import Bank of Bangladesh Ltd. - 50,000,000 - 50,000,000
Standard Bank Ltd. - 95,000,000 - 95,000,000
Shahjalal Islami Bank Limited - - - -
Standard Chartered Bank 150,000,000 350,000,000 150,000,000 350,000,000
550,000,000 1,210,840,397 550,000,000 1,210,840,397
Call Loans
Agrani Bank Limited - - - -
The Premier Bank Ltd. - - - -
Dutch Bangla Bank Ltd - - - -
Jamuna Bank Limited - - - -
Basic Bank Limited - - - -
- - - -
Total short-term and call loans 550,000,000 1,210,840,397 550,000,000 1,210,840,397
Total Borrowings 4,333,821,600 4,565,821,153 4,333,821,600 4,565,821,153
10.2 Security against borrowings from other banks and fnancial institutions
Secured 1,449,846,667 1,865,443,730 1,449,846,667 1,865,443,730
Unsecured 2,883,974,933 2,700,377,423 2,883,974,933 2,700,377,423
4,333,821,600 4,565,821,153 4,333,821,600 4,565,821,153
Secured loans are covered by frst equitable mortgage of all present and future immovable properties and by
foating charges on movable assets of the Company ranking pari-passu among the lenders. The Company has
a Pari Passu Security Sharing Agreement (PPSSA) among the secured lenders stipulating the procedure in the
sharing of the security provided by the Company. Loans repayable within one year have been placed under
current liabilities. Details of loans are as under:
Annual Report 2012
182
2012
Taka
2011
Taka
2012
Taka
2011
Taka
10.3 Maturity grouping of borrowings from other banks and fnancial institutions
Payable on demand - - - -
Up to 1 month 553,420,000 713,300,000 553,420,000 713,300,000
Over 1 month but within 3 months 380,950,000 385,980,000 380,950,000 385,980,000
Over 3 months but within 1 year 743,310,000 1,413,720,397 743,310,000 1,413,720,397
Over 1 year but within 5 years 1,987,600,000 1,302,200,000 1,987,600,000 1,302,200,000
Over 5 years 668,541,600 750,620,756 668,541,600 750,620,756
4,333,821,600 4,565,821,153 4,333,821,600 4,565,821,153
11 Deposits and other accounts
Term deposits (Note- 11.1) 22,008,203,723 16,828,267,206 22,008,203,723 16,828,267,206
Refundable deposits (Note- 11.2) 990,695,376 810,581,392 990,695,376 810,581,392
22,998,899,099 17,638,848,598 22,998,899,099 17,638,848,598
11.1 Term deposits
This represents deposits received from institutions and individuals for a period not less than six months period.
Add: Deposits received during the year 9,831,088,657 10,339,808,968 9,831,088,657 10,339,808,968
26,659,355,863 22,712,970,829 26,659,355,863 22,712,970,829
Less: Matured/encashed during the year 4,651,152,140 5,884,703,623 4,651,152,140 5,884,703,623
11.1.1 Rate of interest
Rate of interest on term deposit receipts ranges from 11.82% to 14% (2011: 7.75% to 14.5%).
11.2 Refundable deposits
The Company takes deposits from the clients of lease and loan on signing of agreement, refundable at the end of
the contract period. Balance at December 31 stands as under:
Deposits against loan and lease rental 377,746,183 318,035,187 377,746,183 318,035,187
Deposits against fnancing as per term
of agreements (Security deposits) 612,949,193 492,546,205 612,949,193 492,546,205
990,695,376 810,581,392 990,695,376 810,581,392
Security deposits are interest bearing while deposits against loan and lease are non interest bearing.
Annual report 2012
183
2012
Taka
2011
Taka
2012
Taka
2011
Taka
11.3 Group-wise break-up of term deposits
Government - - - -
Bank 722,659,988 507,659,988 722,659,988 507,659,988
Other institutions 7,577,918,898 5,321,804,389 7,577,918,898 5,321,804,389
Individuals 13,707,624,837 10,998,802,829 13,707,624,837 10,998,802,829
22,008,203,723 16,828,267,206 22,008,203,723 16,828,267,206
11.4 Maturity analysis of deposits and other accounts
Maturity analysis of Term deposits
Payable on demand - - - -
Up to 1 month 1,141,964,305 491,921,506 1,141,964,305 491,921,506
Over 1 month but within 6 months 10,400,635,190 6,675,532,296 10,400,635,190 6,675,532,296
Over 6 months but within 1 year 6,525,634,427 4,937,484,219 6,525,634,427 4,937,484,219
Over 1 year but within 5 years 3,795,963,546 4,041,570,897 3,795,963,546 4,041,570,897
Over 5 years but within 10 years 143,193,455 680,978,536 143,193,455 680,978,536
Above 10 years 812,800 779,752 812,800 779,752
22,008,203,723 16,828,267,206 22,008,203,723 16,828,267,206
Maturity analysis of Refundable deposit
Payable on demand 50,351,354 41,254,367 50,351,354 41,254,367
Up to 1 month 5,572,620 3,926,096 5,572,620 3,926,096
Over 1 month but within 6 months 85,182,410 57,686,684 85,182,410 57,686,684
Over 6 months but within 1 year 121,523,302 95,430,961 121,523,302 95,430,961
Over 1 year but within 5 years 721,963,798 609,646,514 721,963,798 609,646,514
Over 5 years but within 10 years 6,101,892 2,636,770 6,101,892 2,636,770
990,695,376 810,581,392 990,695,376 810,581,392
12 Other liabilities
Payable and accrued expenses (Note- 12.1) 2,542,999,433 2,021,883,410 2,811,985,019 2,278,831,307
Provision for income tax (Note- 12.2) 1,025,817,298 1,008,738,029 1,176,989,126 1,097,934,965
Inter-company payables (Note- 12.3) 14,579,062 3,204,327 - -
Liabilities under fnance lease (Note- 12.4) - 93,337 - 93,337
Deferred liability-employee gratuity
(Note-12.5) 65,875,650 55,656,128 73,538,051 60,587,771
Portfolio investors' fund (Note- 12.6) - - 700,243,097 491,320,832
Interest suspense account (Note- 12.7) 67,552,869 74,969,334 67,552,869 74,969,334
Provision for doubtful accounts and
future losses (Note- 12.8) 863,001,320 918,907,258 901,633,421 965,482,382
Unpaid dividend 4,625,955 4,664,551 4,625,955 4,664,551
Deferred tax liability (Note - 9.5) 21,283,653 5,513,603 21,283,653 5,513,603
4,605,735,240 4,093,629,977 5,757,851,191 4,979,398,082
Annual Report 2012
184
2012
Taka
2011
Taka
2012
Taka
2011
Taka
12.1 Payable and accrued expenses
Receipt against leases 182,726,232 27,235,243 182,726,232 27,235,243
Liabilities for expenses 2,069,049,808 1,658,857,817 2,085,943,630 1,669,020,736
Liabilities for other fnance 291,223,393 335,790,350 543,315,157 582,575,328
2,542,999,433 2,021,883,410 2,811,985,019 2,278,831,307
12.2 Provision for income tax
Provision
Less: Adjustment during the year 7,405,913 - 7,405,913 -
2,634,778,077 2,067,054,976 2,929,682,033 2,207,052,280
Add: Provision made during the year 428,387,353 575,129,014 529,448,423 730,035,667
Advance tax
Add: Payment made during the year:
Under sections 64 and 74 of ITO 1984 365,345,514 435,707,141 373,113,414 484,381,881
Deduction at source 37,730,657 76,502,432 69,048,935 133,195,443
Others 826,000 674,802 826,000 674,802
403,902,171 512,884,375 442,988,349 618,252,126
2,037,348,132 1,633,445,961 2,282,141,330 1,839,152,982
Net balance at December 31 1,025,817,298 1,008,738,029 1,176,989,126 1,097,934,965
12.3 Inter-company payables
IDLC Securities Limited (Note- 12.3.1) 10,917,913 438,741 - -
IDLC Investments Limited (Note- 12.3.2) 3,661,149 2,765,586 - -
14,579,062 3,204,327 - -
12.3.1
The amount has been paid by IDLC Securities Limited on account of administrative expenses, fxed assets
purchase and CDBL charges on behalf of IDLC Finance Limited.
12.3.2
The amount has been paid by IDLC Investments Limited on account of administrative expenses and CDBL charges
on behalf of IDLC Finance Limited.
Annual report 2012
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2011
Taka
2012
Taka
2011
Taka
12.4 Liabilities under fnance lease
Liabilities under fnance lease represent liabilities against certain motor vehicles taken under fnance lease.
Details of which are given below:
Balance at January 1 93,337 2,790,600 93,337 2,790,600
Add: Addition during the year - - - -
93,337 2,790,600 93,337 2,790,600
Less: Repayment during the year 93,337 2,697,263 93,337 2,697,263
Balance at December 31 - 93,337 - 93,337
12.4.1 Aging analysis of liabilities under fnance lease
Up to one year - 93,337 - 93,337
Above one year to three years - - - -
Above three years to fve years - - - -
- 93,337 - 93,337
The average lease term of the vehicles taken under fnance lease is 60 months and all leases are on fxed
repayment basis. The Company's obligations under fnance lease are secured by the lessor's charge over the lease
assets.
12.5 Deferred liability-employee gratuity
Add: Addition during the year 13,580,302 13,562,280 16,311,060 18,493,923
69,236,430 64,863,211 76,898,831 69,794,854
Less: Payment during the year 3,360,780 9,207,083 3,360,780 9,207,083
12.6 Portfolio investors' fund
This represents the balance of deposits made with the IDLC Investments Ltd. by the portfolio investors to take
margin loan and buy marketable securities. The balance of fund has been arrived at as follows:
Balance at January 1 - - 491,320,832 298,704,763
Add: Deposit and share sold by clients - - 5,012,924,687 1,515,735,686
- - 5,504,245,519 1,814,440,449
Less: Purchase of share and deposit
withdraw by clients - - 4,804,002,422 1,323,119,617
Balance at December 31 - - 700,243,097 491,320,832
Annual Report 2012
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2011
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2012
Taka
2011
Taka
12.7 Interest suspense accounts
Lease income earned and interest on term fnance, car loan and personal loan overdue beyond three months
period and interest on real estate fnance beyond nine months period and interest on short term fnance overdue
beyond permitted credit term plus sixty days period are not recognised as revenue and credited to interest
suspense account. Product wise details are given below:
On lease fnance 29,454,108 14,503,956 29,454,108 14,503,956
On real-estate fnance 13,881,439 16,024,525 13,881,439 16,024,525
On term fnance 7,809,065 13,695,023 7,809,065 13,695,023
On car loans 1,389,961 1,310,414 1,389,961 1,310,414
On personal loans 843,921 477,900 843,921 477,900
On short term fnance 14,174,375 28,957,516 14,174,375 28,957,516
67,552,869 74,969,334 67,552,869 74,969,334
12.8 Provision for loans and advances / investments
Provision required for the year 580,323,653 323,879,776 611,549,923 359,604,133
Provision released during the year (479,433,970) (329,792,557) (518,603,263) (329,792,557)
Provision charged for the year 100,889,683 (5,912,781) 92,946,660 29,811,576
Write of during the year 156,795,621 - 156,795,621 -
12.8(i) Allocation:
Main operation 100,889,683 (7,402,712)
Merchant Bank operation - 1,489,931
100,889,683 (5,912,781)
12.8(ii) Provision charged for the year
General provision 69,764,096 39,600,062 69,764,096 39,600,062
Specifc provision 69,144,373 (98,489,199) 69,144,373 (98,489,199)
Provisions for diminutions in value of
investments (38,018,786) 52,976,356 (45,961,809) 88,700,713
100,889,683 (5,912,781) 92,946,660 29,811,576
Annual report 2012
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2012
Taka
2011
Taka
12.8(iii) Product wise break up of provision:
Lease 350,496,510 406,523,478 350,496,510 406,523,478
Long- term fnance 274,723,293 250,409,895 274,723,293 250,409,895
Real estate fnance 120,479,508 97,825,724 120,479,508 97,825,724
Car loan 11,135,643 9,891,424 11,135,643 9,891,424
Investment in shares 14,957,570 54,304,773 53,589,671 100,879,897
Personal Loan 6,316,986 5,417,730 6,316,986 5,417,730
Short term fnance 55,430,240 57,841,474 55,430,240 57,841,474
Loan to IDLC Investments Limited 29,461,570 36,692,760 29,461,570 36,692,760
863,001,320 918,907,258 901,633,421 965,482,382
13 Share capital
Authorised
400,000,000 ordinary shares of Taka 10 each 4,000,000,000 4,000,000,000 4,000,000,000 4,000,000,000
Issued, subscribed and paid-up
123,750,000 ordinary shares of Taka 10 each 1,237,500,000 990,000,000 1,237,500,000 990,000,000
(2011: 99,000,000 ordinary shares of Taka 10 each)
Paid-up share capital as on December 31, 2012 comprises the following:
Composition of shareholding:
Sponsor shareholders: 2012 2011
% of
holding
Number of
shares
Taka Taka
Domestic
The City Bank Limited (CBL) 28.37 35,103,537 351,035,370 280,828,300
Sadharan Bima Corporation (SBC) 7.62 9,428,512 94,285,120 75,428,100
35.99 44,532,049 445,320,490 356,256,400
General shareholders:
Transcom Group 13.33 16,499,912.00 164,999,120.00 131,999,300.00
Eskayef Bangladesh Limited 8.00 9,900,000 99,000,000 79,200,000
Transcraft Limited 4.01 4,966,412 49,664,120 39,731,300
Bangladesh Lamps Limited 1.32 1,633,500 16,335,000 13,068,000
Mercantile Bank Limited 7.50 9,281,250 92,812,500 74,250,000
Reliance Insurance Co. Ltd. 7.00 8,662,500 86,625,000 69,300,000
Bangladesh Fund 3.20 3,958,387 39,583,870 31,503,100
Pubali Bank Limited 1.14 1,412,600 14,126,000 -
Eastern Bank Limited 1.10 1,362,500 13,625,000 21,634,000
Marina Apparels Limited 1.00 1,237,500 12,375,000 -
Other Institution/Corporate 8.00 9,904,686 99,046,860 91,766,100
Individuals 21.74 26,898,616 268,986,160 213,291,100
64.01 79,217,951 792,179,510 633,743,600
Total 100.00 123,750,000 1,237,500,000 990,000,000
Annual Report 2012
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Taka
2011
Taka
Distribution of shareholders:
Classifcation of shareholdings as required by Regulation 37 of the Listing Regulations of Dhaka Stock Exchange
Ltd. are as follows:
Number of share
Number of
shareholders
Number of
shares
Percentage
of holdings
Less than 500 4,853 1,131,880 0.91%
501 to 5,000 3,906 6,350,869 5.13%
5,001 to 10,000 344 2,436,746 1.97%
10,001 to 20,000 182 2,531,506 2.05%
20,001 to 30,000 56 1,381,148 1.12%
30,001 to 40,000 18 625,736 0.51%
40,001 to 50,000 16 726,815 0.59%
50,001 to 100,000 51 3,462,767 2.80%
100,001 to 300,000 35 5,906,254 4.77%
300,001 to Above 32 99,196,279 80.16%
9,493 123,750,000 100.00%
The shares were listed with Dhaka Stock Exchange Ltd. on March 20, 1993, and with Chittagong Stock Exchange
Ltd. on November 25, 1996, and quoted at Taka 91.9 and Taka 93.3 at Dhaka Stock Exchange Ltd. and Chittagong
Stock Exchange Ltd. respectively at December 30, 2012.
13.1 Capital Adequacy Ratio (CAR):
As per section 4(GHA) of the Financial Institution Rule 1994, the minimum paid up capital of the Financial
Institution (FI) shall be Tk. 100 crore; Provided that the sum of paid up capital and reserves shall not be less than
the minimum capital determined by the Bangladesh Bank under the Risk-Based Assets of the company.
The surplus eligible capital of the company as well as the Group at the close of business on December 31, 2012
were Tk. 85.76 crore and Tk. 139.96 crore, respectively.
Details are shown below:
Core Capital ( Tier-1)
Paid-up capital (Note-13) 1,237,500,000 990,000,000 1,237,500,000 990,000,000
Share premium (Note-14) 3,750,000 3,750,000 3,750,000 3,750,000
Statutory reserves (note 15) 841,050,246 723,210,192 841,050,246 723,210,192
General reserves (Note 16) 811,250,000 811,250,000 811,250,000 811,250,000
Dividend equalization reserves 46,500,000 46,500,000 46,500,000 46,500,000
Retained earnings 869,665,597 645,805,382 1,753,241,814 1,405,760,814
Non-controlling interest - - 1,787 1,615
Sub-Total 3,809,715,843 3,220,515,574 4,693,293,847 3,980,472,621
2012
Taka
2011
Taka
2012
Taka
2011
Taka
Annual report 2012
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2011
Taka
2012
Taka
2011
Taka
Supplementary capital (Tier -II)
General Provision (Unclassifed loans
up to specifed limit + SMA + of
Balance Sheet exposure) (Note 7.17) 314,480,897 261,792,583 314,480,897 261,792,583
Assets Revaluation Reserves up to 50% - - - -
Revaluation Reserve for Securities up
to 45% - - - -
All others preference shares - - - -
Others (if any other item approved by
Bangladesh Bank) - - - -
Sub-Total 314,480,897 261,792,583 314,480,897 261,792,583
A) Total capital 4,124,196,740 3,482,308,157 5,007,774,744 4,242,265,204
Total assets including of-balance
sheet exposures

35,979,752,007

30,928,598,116

38,015,445,962

32,574,323,268
B) Total risk weighted assets 32,665,937,524 29,260,260,176 36,081,384,079 31,175,735,350
C) Required capital based on risk
weighted assets (10% on B) 3,266,593,752 2,926,026,018 3,608,138,408 3,117,573,535
D) Surplus (A-C) 857,602,988 556,282,139 1,399,636,336 1,124,691,669
Capital Adequacy Ratio (%) 12.63 11.90 13.88 13.61
14 Share premium
This represents premium amount over par value of shares received against issue of 75,000 shares in 1993 @Taka
50 per share.
15 Statutory reserves
Add: Transferred on appropriation of proft 117,840,054 160,845,796 117,840,054 160,845,796
16 General reserve
Add: Transferred on appropriation of proft - - - -
17 Business commitments and contingencies
In the normal course of business, the Company makes various commitments and incurs certain contingent
liabilities. No material losses are anticipated as a result of these transactions. These contingent liabilities and
business commitments are quantifed below:
Annual Report 2012
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Taka
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Taka
2012
Taka
2011
Taka
17.1 Contingent liabilities
Letters of guarantee 1,051,435 - 1,051,435 -
Irrevocable letters of credit 127,193,600 126,958,540 127,193,600 126,958,540
Indemnity Bond 8,811,279 8,811,279 8,811,279 8,811,279
137,056,314 135,769,819 137,056,314 135,769,819
17.2 Other commitments
Lease and term fnance commitments
outstanding at December 31
(168,534,091) 913,264,298 (168,534,091) 913,264,298
Real estate fnance commitments
264,883,002 337,289,584 264,883,002 337,289,584
Car loan commitments outstanding at
December 31
- 21,766,112 - 21,766,112
Personal loan commitments
(1,825,000) 1,693,001 (1,825,000) 1,693,001
94,523,911 1,274,012,995 94,523,911 1,274,012,995
17.3 Money for which the FI is contingently liable in respect of guarantee given in favor of:
Directors or of cers - - - -
Government - - - -
Banks and other fnancial institutions - - - -
Others 1,051,435 - 1,051,435 -
1,051,435 - 1,051,435 -
17.4 Capital expenditure commitments
There was no capital expenditure contracted but not incurred or provided for at December 31, 2012 (2011: nil).
There was no material capital expenditure authorised by the Board but not contracted for at December 31, 2012
(2011: nil).
17.5 Unacknowledged debt
The Company had no claim, legal or other, against it which has not been acknowledged as debt at the balance
sheet date.
Annual report 2012
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Taka
2011
Taka
2012
Taka
2011
Taka
17.6 Disbursements
During the year the Company contracted and disbursed the following amounts :
2012 2011
Contracts/
sanction
Disbursement
Contracts/
sanction
Disbursement
Tk. Tk. Tk. Tk.
Lease and term fnance 12,135,613,690 12,304,147,781 9,430,635,690 8,517,371,392
Real estate fnance 3,000,730,312 2,735,847,310 2,922,826,558 2,585,536,974
Car loans 174,289,292 174,289,292 220,334,000 198,567,888
Personal loans 51,178,500 53,003,500 84,787,801 83,094,800
15,361,811,794 15,267,287,883 12,658,584,049 11,384,571,054
18 Income statement
Income:
Interest, discount and similar income
(Note-18.1) 4,747,564,345 3,784,962,902 4,902,420,067 3,798,938,265
Dividend income (Note-21) 6,272,326 227,497,685 9,243,980 35,321,280
Fees, commission and brokerage
(Note-22) 31,088,597 179,437,286 336,660,324 462,752,097
Other operating income (Note-23) 258,327,660 210,016,857 257,794,715 227,252,920
5,043,252,928 4,401,914,730 5,506,119,086 4,524,264,562
Expenses:
Interest paid on deposits and
borrowings (Note-20) 3,087,770,161 2,359,226,854 3,102,879,252 2,364,389,738
Administrative expenses (Note-18.2) 587,262,776 473,695,455 774,661,590 660,544,816
Other operating expenses (Note-33) 147,177,332 132,961,065 168,513,040 161,874,299
Depreciation on assets (Note-32) 87,587,182 65,561,952 114,930,378 91,041,615
3,909,797,451 3,031,445,326 4,160,984,260 3,277,850,468
1,133,455,477 1,370,469,404 1,345,134,826 1,246,414,094
18.1 Interest, discount and similar income
Interest income (Note -19) 4,712,055,155 3,826,541,599 4,853,769,697 3,942,101,471
Gain on sale of marketable securities
(Note - 21) 35,509,190 (45,693,093) 48,650,370 (147,277,602)
Income from investment in bonds
(Note - 21) - 4,114,396 - 4,114,396
4,747,564,345 3,784,962,902 4,902,420,067 3,798,938,265
Annual Report 2012
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Taka
2011
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2012
Taka
2011
Taka
192
2012
Taka
2011
Taka
2012
Taka
2011
Taka
18.2 Administrative expenses
Salary and allowances (Note-24) 403,925,724 333,051,679 514,968,850 431,010,582
Rent, taxes, insurance, electricity, etc.
(Note-25) 58,419,422 53,015,020 102,436,907 108,031,424
Legal expenses (Note-26) 6,140,794 11,473,555 10,273,842 17,585,871
Postage, stamp, telecommunication,
etc. (Note-27) 16,348,704 18,458,870 28,105,616 31,193,643
Stationery, printing, advertisement,
etc. (Note-28) 71,372,242 41,050,954 75,103,834 45,356,398
Managing Director's salary and fees
(Note-29) 10,527,400 10,527,400 10,527,400 10,527,400
Directors' fees (Note-30) 655,500 638,250 839,500 753,250
Auditors' fees (Note-31) 470,000 839,500 602,250 1,023,450
Repair of Company's assets (Note-32) 19,402,990 4,640,227 31,803,391 15,062,798
587,262,776 473,695,455 774,661,590 660,544,816
18.3 Allocation of interest expenses
Merchant Bank Operation - (353,952,752)
Main Operation 3,087,770,161 2,713,179,606
3,087,770,161 2,359,226,854
18.4 Allocation of administrative expenses
Merchant Bank Operation - 40,227,592
Main Operation 587,262,776 433,467,863
587,262,776 473,695,455
18.5 Allocation of other operating expenses
Merchant Bank Operation - 14,069,353
Main Operation 147,177,332 118,891,712
147,177,332 132,961,065
18.6 Allocation to Merchant Banking operation
Indirect expenses have been allocated based on number of employees working in Merchant Banking Division.
Annual report 2012
193
2012
Taka
2011
Taka
2012
Taka
2011
Taka
19 Interest income
This represents interest income for the following products:
Lease fnance 690,478,507 610,874,668 690,478,507 610,874,668
Real estate fnance 1,134,154,173 874,935,844 1,134,154,173 874,935,844
Term fnance 1,738,836,620 936,135,543 1,738,836,620 936,135,543
Short term fnance 138,923,759 75,090,303 138,923,759 75,090,303
Car loans 60,117,512 58,109,671 60,117,512 58,109,671
Personal loans 33,046,228 33,719,869 33,046,228 33,719,869
Margin loan to portfolio investors - 549,625,294 605,982,394 833,831,140
Loan to IDLC Investments Limited 486,596,997 240,680,939 - -
Income against pre-funding for
foreign trade - - 1,645,255 -
4,282,153,796 3,379,172,131 4,403,184,448 3,422,697,038
Interest income on balance with
other banks and fnancial institutions 190,369,439 325,684,301 211,053,329 397,719,266
Call loans 120,033,126 41,448,764 120,033,126 41,448,764
Loan against deposits 119,498,794 80,236,403 119,498,794 80,236,403
4,712,055,155 3,826,541,599 4,853,769,697 3,942,101,471
20 Interest expenses
Interest on term deposits 2,588,947,239 1,920,086,035 2,588,947,239 1,920,086,035
Interest on borrowings 430,296,981 340,072,705 438,335,315 341,470,554
Interest on Secured Zero Coupon
Bonds 26,657,369 22,486,562 26,657,369 22,486,562
Interest on Security Deposit 34,983,736 55,876,368 34,983,736 55,876,368
Interest on Call Loan 6,883,014 6,234,458 6,883,014 6,234,458
Others 1,822 14,470,726 7,072,579 18,235,761
3,087,770,161 2,359,226,854 3,102,879,252 2,364,389,738
21 Investment income
Gain/(loss) on sale of marketable
securities 35,509,190 (45,693,093) 48,650,370 (147,277,602)
Dividend income 6,272,326 227,497,685 9,243,980 35,321,280
Income from investment in bonds - 4,114,396 - 4,114,396
41,781,516 185,918,988 57,894,350 (107,841,926)
Annual Report 2012
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Taka
2011
Taka
2012
Taka
2011
Taka
22 Commission and brokerage
Agency fees 1,522,240 970,000 1,522,240 970,000
Arrangement fees 19,734,069 1,669,225 19,734,069 1,669,225
Advisory fees - 3,350,000 9,101,000 13,300,000
Commission & brokerage 9,367,138 - 172,901,466 206,986,294
Underwriting commission - 846,289 746,400 846,289
Documentation fees - 169,000 25,500 191,500
Custodial fees 465,150 133,678 465,150 133,678
Issue management fees - 4,800,000 3,000,000 6,800,000
Portfolio management fees - 100,324,985 88,265,839 151,769,486
Settlement charges - 67,174,109 40,898,660 80,085,625
31,088,597 179,437,286 336,660,324 462,752,097
23 Other operating income
Realisation of late payment interest
& others 17,116,799 55,845,957 17,116,799 55,845,957
Transfer price/ gain at the time of
expiry of lease 2,413,275 13,069,743 2,413,275 13,069,743
Application, processing and
documentation fees 135,400,557 31,950,825 135,400,557 31,950,825
Service charges 79,177,285 51,502,643 79,177,285 51,502,643
Gain on disposal of fxed assets 3,199,736 8,540,421 88,545 8,482,477
Account opening & BO account
maintenance fee - - 1,465,600 1,783,900
Miscellaneous income 21,020,008 49,107,268 22,132,654 64,617,375
258,327,660 210,016,857 257,794,715 227,252,920
24 Salaries and allowances 403,925,724 333,051,679 514,968,850 431,010,582
24.1 Salary and allowances
Salary and allowances of IDLC Finance Ltd. include annual contribution of Tk. 27,909,993 to Provident Fund
and provision of Tk. 10,219,522 for Gratuity Fund. Salary and allowances of IDLC Group include annual
contribution of Tk. 35,675,122 to Provident Fund and provision of Tk. 12,950,281 for Gratuity Fund.
25 Rent, taxes, insurance, electricity, etc.
Rent, rate and taxes 37,202,425 38,361,802 72,735,468 86,954,694
Insurance 4,035,822 2,122,225 5,822,228 3,516,815
Power and electricity 17,181,175 12,530,993 23,879,211 17,559,915
58,419,422 53,015,020 102,436,907 108,031,424
Annual report 2012
195
2012
Taka
2011
Taka
2012
Taka
2011
Taka
26 Legal expenses
Renewal and registration 4,147,404 10,963,615 4,582,434 11,268,320
Other professional charges 1,993,390 509,940 5,691,408 6,317,551
6,140,794 11,473,555 10,273,842 17,585,871
27 Postage, stamp, telecommunication, etc.
Postage 732,440 807,014 1,011,651 974,693
Telecommunication and internet etc. 15,616,264 17,651,856 27,093,965 30,218,950
16,348,704 18,458,870 28,105,616 31,193,643
28 Stationery, printing, advertisements, etc.
Stationery & printing 15,280,446 17,728,825 18,233,291 20,906,375
Advertisement and publicity 56,091,796 23,322,129 56,870,543 24,450,023
71,372,242 41,050,954 75,103,834 45,356,398
29 Managing Director's salary and benefts
Basic pay 4,524,000 4,524,000 4,524,000 4,524,000
Allowances 3,420,000 3,420,000 3,420,000 3,420,000
Bonus 2,131,000 2,131,000 2,131,000 2,131,000
Company's contribution to provident
fund 452,400 452,400 452,400 452,400
10,527,400 10,527,400 10,527,400 10,527,400
30 Directors' fees
Honorium for attending meeting 655,500 638,250 839,500 753,250
Incidental expenses for attending
meeting - - - -
655,500 638,250 839,500 753,250
30.1 Directors' fees
Directors remuneration for attending each board meeting during the year was Tk. 5,000 per meeting/Director.
No Director has been paid any remuneration for rendering any special services during the year.
31 Auditors' fees
Statutory annual audit fees (including VAT) 470,000 548,500 602,250 600,750
Other audit fees - 291,000 - 422,700
470,000 839,500 602,250 1,023,450
Annual Report 2012
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2012
Taka
2011
Taka
2012
Taka
2011
Taka
32 Depreciation and repair of company's assets
Freehold assets ((Note-8 & 8(a)) 87,151,639 64,793,352 114,494,835 90,273,015
Leasehold assets ((Note-8 & 8(a)) 435,543 768,600 435,543 768,600
87,587,182 65,561,952 114,930,378 91,041,615
Repair and maintenance
For premises & vehicles 3,791,507 3,940,408 15,283,348 14,259,907
For computers and computers
accessories 15,611,483 699,819 16,520,043 802,891
19,402,990 4,640,227 31,803,391 15,062,798
106,990,172 70,202,179 146,733,769 106,104,413
33 Other expenses
Bank charges 1,099,537 1,815,009 1,099,537 1,815,009
Books and periodicals 185,360 202,846 245,722 353,002
Car expenses 12,860,367 11,144,722 16,143,125 12,531,153
Donations and subscriptions 5,284,392 2,806,769 5,284,392 2,806,769
Medical & welfare expenses 12,421,838 4,659,730 12,505,101 4,828,025
Entertainment 7,355,365 5,143,097 9,588,655 8,039,054
Consultancy fees 736,876 1,375,120 736,876 1,375,120
Of ce service expenses 30,593,703 20,274,479 32,149,303 22,403,866
Training expenses 1,431,111 10,680,339 1,638,156 11,134,529
Travel and conveyances 8,443,966 6,639,101 8,987,845 7,094,421
Brokerage charges - 6,650,104 - 6,650,104
CDBL charges 500 15,677,443 6,740,943 17,653,984
Loss on disposal of lease assets 19,447 12,021,388 19,447 12,021,388
Howla and Laga charge - - 12,760,708 17,583,477
Repossession fees and others 66,744,870 33,870,918 60,613,230 35,584,398
147,177,332 132,961,065 168,513,040 161,874,299
Annual report 2012
197
34 Operating segment report
For the year 2012
Core business
Merchant
banking
Subsidiary Total
Revenue and proft
External revenue
Net interest income 1,058,732,504 - 692,157,941 1,750,890,445
Investment income 41,781,516 - 16,112,834 57,894,350
Commission and brokerage 31,088,597 - 305,571,727 336,660,324
Other Operating income 258,327,660 - (532,945) 257,794,715
Inter-segment revenue 565,552,490 - (565,552,490) -
Total segment revenue 1,955,482,767 - 447,757,067 2,403,239,834
Other operating expenses 734,440,108 - 208,734,522 943,174,630
Major non-cash expenses:
Depreciation 87,587,182 - 27,343,196 114,930,378
Provision for future losses 100,889,683 - (7,943,023) 92,946,660
922,916,973 - 228,134,695 1,151,051,668
Reportable segment proft before tax 1,032,565,794 - 219,622,372 1,252,188,166
For the year 2011
Core business
Merchant
banking (Up to
August 15th)
Subsidiary Total
Revenue and proft
External revenue
Net interest income 1,030,961,264 195,672,542 351,077,927 1,577,711,733
Investment income 185,918,988 - (293,760,914) (107,841,926)
Commission and brokerage 2,639,225 176,798,061 283,314,811 462,752,097
Other Operating income 210,016,857 - 17,236,063 227,252,920
Inter-segment revenue 240,680,939 - (240,680,939) -
Total segment revenue 1,670,217,273 372,470,603 117,186,948 2,159,874,824
Other operating expenses 552,359,575 54,296,945 215,762,595 822,419,115
Major non-cash expenses:
Depreciation 62,432,375 3,129,577 25,479,663 91,041,615
Provision for future losses (7,402,712) 1,489,931 35,724,357 29,811,576
607,389,238 58,916,453 276,966,615 943,272,306
Reportable segment proft before tax 1,062,828,035 313,554,150 (159,779,667) 1,216,602,518
Segment assets and liabilities
The necessary information regarding assets and liabilities of operating segments in not separable and
individually identifable for this purpose. For this reason the assets and liabilities of the respective segments is
has not been presented here.
Annual Report 2012
198
35 Tax expenses
35.1 Current tax
Provisions for current tax has been made on the basis of the proft for the year as adjusted for taxation
purposes in accordance with the provisions of Income Tax Ordinance, 1984 and amendments made thereto.
The current tax rate for the Company is 42.5% on taxable income. Full provision has been made for disputed
tax against which appeal has been made and decision is pending.
35.2 Deferred tax
Deferred tax is provided using the balance sheet method for all temporary diferences arising between the
tax base of assets and liabilities and their carrying values for fnancial reporting purposes as per Bangladesh
Accounting Standard 12 "Income Taxes".
2012
Taka
2011
Taka
2012
Taka
2011
Taka
35.3 Average efective tax rate
The average efective tax rate is calculated below as per Bangladesh Accounting Standard 12 Income Taxes:
Tax expenses 443,365,525 572,153,206 539,366,940 716,319,564
Accounting proft before tax 1,032,565,794 1,376,382,185 1,252,188,166 1,216,602,518
Average efective tax rate 42.94% 41.57% 43.07% 58.88%
36 Earnings per share (EPS)
Earnings per share as shown in the face of the Proft and Loss Account is calculated in accordance with
Bangladesh Accounting Standard 33: "Earnings Per Share".
Basic earnings per share has been calculated as follows:
Earnings attributable to ordinary
shareholders (Net proft after tax) 589,200,269 804,228,979 712,821,054 500,283,267
Weighted average number of
ordinary shares outstanding during
the year 123,750,000 123,750,000 123,750,000 123,750,000
Basic earnings per share 4.76 6.50 5.76 4.04
No diluted earning per share is required to be calculated for the year as there was no convertible securities for
dilution during the year.
Annual report 2012
199
37 Related party disclosure
a. Particulars of Directors and their interest in diferent entities
SL
no.
Name of Directors
Status in
IDLC
Name of the frms/companies in which
interested as proprietor, partner,
director, managing agent, guarantor,
employee etc.
Status in
interested
entities
(%) of
Holding/
Interest in
the concern
as on
31.12.12
1. Mr. Anwarul Huq Chairman Finaccord Trading Limited Chairman & CEO 3.10%
2. Mr. Rubel Aziz Director The City Bank Limited Chairman 2.50%
Janata Insurance Co. Limited - 1.33%
Partex Plastics Furniture Limited MD 37.50%
Fotoroma Limited MD 10.00%
Partex Properties Limited MD 35.00%
Partex Foundry Limited MD 40.00%
New Horizon Farms Limited MD 50.00%
New Era Milk Processing Limited MD 50.00%
Partex Beverage Limited MD 0.20%
Partex Plastics Limited MD 37.50%
Partex Jute Mills Limited MD 75.00%
Amber Cotton Mills Limited Director 2.08%
Partex Real Estate Limited Director 15.00%
Partex Rotor Limited Director 35.00%
Partex Sugar Mills Limited Director 15.00%
Partex Denim Limited Director 15.00%
Partex Rotor Spinning Mills Limited Director 37.50%
Partex Energy Limited Director 37.50%
Dhakacom Limited Director 15.00%
Partex Spinning Mills Limited Director 25.00%
Partex Ceremic Limited Director 25.00%
3. Mr. Aziz Al Kaiser Director The City Bank Limited Director 2.91%
Partex Star Group Vice Chairman -
Partex PVC Industries Limited MD 75.00%
Star Particle Board Mills Limited MD 75.00%
Partex Furniture Industries Limited MD 75.00%
Partex Laminates Limited MD 75.00%
Partex Real Estate Limited MD 15.00%
Partex Limited MD 75.00%
Corvee Maritime Co. Limited MD 75.00%
Partex Builders Limited MD 75.00%
Fairhope Housing Limited MD 80.00%
Rubel Steel Mills Limited Director 15.00%
Danish Condensed Milk (BD) Limited Director 15.00%
Danish Foods Limited Director 15.00%
Annual Report 2012
200
SL
no.
Name of Directors
Status in
IDLC
employee etc.
Status in
interested
entities
(%) of
Holding/
Interest in
the concern
as on
31.12.12
Danish Milk Bangladesh Limited Director 15.00%
Danish Distribution Network Limited Director 15.00%
Danish Dairy Firm Limited Director 15.00%
Janata Insurance Co. Limited 2.00%
Partex Housing Limited Director 50.00%
GSP Finance Company (BD) Limited Director 10.00%
4. Mr. Hossain Mehmood Director The City Bank Limited
Representative
Director of A-1
Plolymer Ltd.
2.00%
The City General Insurance Company Ltd Share holder 3.03%
Hossain Dyeing & Printing Mills Limited MD 20.33%
Mehmood Industries (Pvt) Limited MD 30.00%
Anwar Silk Mills Limited MD 19.67%
Anwar Cement Mills Limited Director 8.06%
Khaled Iron & Steel Mills Limited Director 6.76%
Anwar Ispat Limited Director 33.33%
A-1 Polymer Limited Director 29.97%
Anwar Jute & Spinning Mills Limited Director 20.81%
Anwar Galvanizing Limited Director 5.68%
5. Ms. Meherun Haque Director The City Bank Limited Vice Chairman 0.29%
6. Mr. Kazi Mahmood
Sattar
Director The City Bank Limited Managing
Director & CEO
-
Unique Hotel & Resorts Limited Nominated
Director of CBL
-
7. Mr. Md. Habibur
Rahman Mollah
Director Transcom Group Chief Operating
Of cer
-
8. Mr. Md. Rezaul Karim Director Sadharan Bima Corporation MD -
Investment Corporation of Bangladesh Director-
Nominated by SBC
-
Central Depository Bangladesh Ltd Director-
Nominated by SBC
-
National Housing Finance & Investments Ltd Director-
Nominated by SBC
-
National Tea Company Limited Director-
Nominated by SBC
-
Bangladesh Insurance Academy. Director-
Nominated by SBC
-
Annual report 2012
201
SL
no.
Name of Directors
Status in
IDLC
employee etc.
Status in
interested
entities
(%) of
Holding/
Interest in
the concern
as on
31.12.12
9. Mr. Mohammad
Amanullah
Director Mercantile Bank Limited Director 5.30%
Aman Spinning Mills Limited Chairman 20.00%
Arena HRI Limited Chairman 2.30%
Arena Securities Limited Chairman 25.00%
Mousumi Enterprise Limited Chairman 50.00%
Arena Industries Limited Chairman 47.93%
Arena Consumer Products Limited Chairman 25.00%
10. Mr. Farooq Sobhan Independent
Director
Centre for Corporate Social
Responsibility (CSR)
Chairman of the
Board of Trustees
-
b. Signifcant contract where FI is party and wherein Directors have interest - Nil
c. Related party transactions
Parties are considered to be related if one party has the ability to control the other party or exercises signifcant infuence
over the other party in making fnancial and operational decision and include associated companies with or without
common Directors and key management positions. The Company has entered into transaction with other related entities
in normal course of business that fall within the defnition of related party as per Bangladesh Accounting Standard 24: "
Related Party Disclosures." Transactions with related parties are executed on the same terms, including interest rate and
collateral, as those prevailing at the time for comparable transactions with other customers of similar credentials and do
not involve more than a normal risk.
Details of transactions with related parties and balances with them as at December 31, 2012 were as follows:
Name of the related party
Transaction
nature
Relationship
Balance as
at January 1,
2012
Addition Adjustment
Balance at
year end
receivable/
(payable)
Taka Taka Taka Taka
Sadharan Bima Corp Debenture Sponsor
shareholder (200,000,000) (20,000,000) 120,000,000 (100,000,000)
Mercantile Bank Ltd Zero coupon
bond
General
shareholder (37,500,000) - 25,000,000 (12,500,000)
Transcom group Lease/Loan Shareholder 70,720,302 - (24,256,584) 46,463,718
(166,779,698) (20,000,000) 120,743,416 (66,036,282)
d. Share issued to Directors and executives without consideration or exercisable at a discount - Nil
Annual Report 2012
202
e. Lending policy to related parties
Related parties are allowed Loans and Advances as per General Loan Policy of the Company.
f. Loans, advances and leases to Directors and their related concern
Name of the related party
Transaction nature Classifcation status Provision kept Security amount
Transcom group Lease/Loan Standard 80,052 543,470
g. Investment in the Securities of Directors and their related concern - Nil
38 Receivable from Directors
The Company does not have any receivable from any of the Directors of the Company as at December 31, 2012.
39 Disclosure on Audit committee
a. Particulars of audit committee
The Audit Committee of the board was duly constituted by the Board of Directors of the Company in accordance
with the Bangladesh Banks DFIM circular no.13 dated October 26, 2011 and Bangladesh Securities and Exchange
Commission notifcation ref. no. No. SEC/CMRRCD/2006-158/129/Admin/43 dated July 03, 2012.
The Audit Committee of the Board of Directors consisted of the following 5 (fve) members of the Board:
Name Status at the Company Status at committee
Mr. Md. Habibur Rahman Mollah, FCA Director Chairman
Mr. Anwarul Huq Chairman Member
Mr. Rubel Aziz Director Member
Mr. Md. Rezaul Karim Director Member
Mr. Farooq Sobhan Independent Director Member
The company secretary is to act as Secretary of the Audit Committee .
b. Meetings held by the committee during the year by date:
Meeting No Held on
25th 22-Feb-2012
26th 13-May-2012
27th 16-Jul-2012
28th 22-Oct-2012
Annual report 2012
203
c. The audit committee meeting held four (4) times during the year 2012 and carried out the following
tasks:
i) Discussed with external auditor and management prior to the fnalization of Financial Statements of
IDLC Finance Limited for the year ended December 31, 2011as per Bangladesh Bank circular no. 13
dated October 26, 2011.
ii) Reviewed the draft audited Financial Statements of IDLC Finance Limited for the year ended
December 31, 2011.
iii) Reviewed the report of the Audit Committee for incorporation in the Annual Report 2011;
iv) Recommended for appointing external auditor for the year 2012;
v) Reviewed the Bangladesh Bank Inspection Report on corporate head of ce of IDLC as of June 30,
2011, and, Management responses to the report;
vi) Reviewed the management letter of the annual audit of Financial Statements of IDLC for the year
vii) Reviewed the internal audit reports;
viii) Reviewed the unaudited Financial Statements of IDLC Finance Limited for the quarter and half-year
ended for the year 2012;
ix) Reviewed the guidance notes on the prevention of money laundering and terrorist fnancing;
x) Reviewed action plan to comply with the revised corporate governance guidelines issued by
Bangladesh Securities and Exchange Commission;
40 Foreign remittance
There were no foreign remittance during the year 2012.
41 Number of employees
The Company paid an aggregate amount more than Taka 36,000 per annum to 299 employees and more than Tk.
3,000 per month to 183 employees who were in employment for full year or part of the year.
42 Subsequent events
42.1 Dividend for the year 2012
The Board of Directors at the 201st Board Meeting held on February 14, 2013, recommended to the shareholders
a stock dividend @ 30% i.e. three shares for every ten fully paid shares of tk. 10 each held (amounting to Tk.
371,250,000). This will be considered for approval by the shareholders at the 28th Annual General Meeting (AGM)
to be held on March 25, 2013.
43 General
43.1 The Company publishes its quarterly accounts as per the Securities and Exchange Commission (SEC)
Notifcation No. SEC/CMRRCD/2008-183/Admin/03-34, dated September 27, 2009.
43.2 The Company does not have any restriction on distribution and payment of dividends.
43.3 During the year under report, no matters were submitted to a vote of shareholders of the Company.
43.4 Previous year's fgures have been rearranged where necessary to conform to current year's presentation.
Chairman Director CEO & Managing Director Company Secretary
Annual Report 2012
Sustainable Growth
205
GROUPS SUBSIDIARY - IDLCSL
Annual Report 2012
DIRECTORS REPORT - IDLCSL
It is the immense pleasure of the Board in presenting the Directors Report, the audited Balance Sheet and Income
statements of the company for the year ended December 31, 2012 and auditors report thereon along with capital
market overview, Companys performance and other matters in compliance of the Companies Act 1994.
IDLC Securities Limited was set up to cater the needs of the institutional and retail investors in the capital market.
The company ofers full-fedged international standard brokerage services for both local & foreign investors. The
Company has proven track record of quality client services and strict compliance with rules and regulations with
high standard of both corporate and employees ethics.
Operational Highlights 2012:
A. Client base:
2006 2007 2008 2009 2010 2011 2012
No. of account at the beginning - 126 1,505 2,759 4,556 7,024 7,988
Account opened during the year 126 1,403 1,269 1,833 2,525 2,178 1,186
Account closed during the year - (24) (15) (36) (57) (1,214) (190)
No. of account at year end 126 1,505 2,759 4,556 7,024 7,988 8,984
Growth (year to year) 100% 1094% 83% 65% 54% 14% 12%
Composition of client base:
Individual 108 1,428 2,599 4,330 6,750 7,672 8,652
Institution & Foreign 14 37 67 85 108 129 148
NRB 4 40 93 141 166 187 184
Total 126 1,505 2,759 4,556 7,024 7,988 8,984
B. Order Management System (OMS):
Focusing the new demand of clients and cope with the diversion of business from physical presence to online
based, IDLC Securities Limited established an order management system (OMS) in 2010 and it was fully functioned
Core Competencies:
Strong Corporate Branding
Superior clients service
Ef cient trade execution
Reliable order management system
Quality Human Resources
Service accessibility through strong branch
network
Major Functions:
Brokerage Services:
Trade execution through Dhaka and Chittagong
Stock Exchanges
Custodial services
Dealers accounts operation
CDBL Services:
Benefcial Owner (BO) accounts opening and
maintenance
Dematerialization and Re-materialization of shares
Transfers and transmission of securities
Pledging, un-pledging and confscation of
securities
Corporate events announcement Enquiry
BO ISIN balances enquiry
Customer Focus:
Retail Individual Investors
High Net worth (HNW) Individual
Non-Resident Bangladeshi (NRB) Investors
Foreign and institutional Investors
(A Fully Owned Subsidiary of IDLC Finance Limited)
206 DIRECTORS REPORT - IDLCSL
Annual Report 2012
since then. The main objective of OMS is to facilitate those investors who are not able to come physically at our
of ces premises to execute trade. Under OMS, IDLCSL provides the following services to its local, NRB & foreign
investors-
Call Center
Through the call center our professional associates assist the investors executing their trades ef ciently. They also
meet diferent queries of the investors regarding their portfolios or any trading rules and regulations.
i-Trade
Under this facility investors could access their portfolio or portfolios they manage and also execute trades through
internet from anywhere of the world.
m-Trade
Under this service, investor could access portfolio on their mobile phone by using a Java based application.
The investors could also place buy or sell order from that application. After execution of a trade, clients get a
confrmation SMS.
SMS Based Service
Under this service, investors could place order or query their portfolio by sending SMS in a predefned format. To
avail the service investors have to register their mobile number with IDLCSL.
The statistics of using services from OMS as of December 31, 2012 were as follows:
Services Call Center Internet Mobile SMS
Number of registered investors 2,013 1,950 1,103 1,035
C. Major Operational Challenges in 2012:
Market turnover decreased by 36%
Capital market index fallen by 20%
Restructuring the HR and infrastructural set up
General and Admin cost reduction initiatives
Investment arbitrage
Concentration to cash base trade from margin loan based trade
Activity based performance management system
D. Major Operational Achievement in 2012:
Successful restructuring of infrastructure and Human Resources
Signifcant foreign trade in 2012
Strategic alliance with AT Capital and some foreign fund manager
4,227 no. of client visit in 2012
1,186 new accounts open during the year
207 DIRECTORS REPORT - IDLCSL
Annual Report 2012
Financial Highlights 2012:
In 2012, IDLCSL has averagely secured the 4th position in terms of turnover in the Dhaka Stock Exchange Limited.
IDLCSLs operating result during the year 2012 is summarized below:
(Amount in BDT million)
2012 2011
Turnover in DSE & CSE 53,543 74,952
Operating revenue 165 209
Operating expenses 161 207
Net proft/(loss) before tax 134 (57)
Net proft/(loss) after tax & provision 81 (164)
Total Shareholders Equity 830 750
Total assets 1,170 1,096
Return on total assets (%) 7 (11)
Return on shareholders equity (%) 10 (18)
Despite 36% negative growth in trade volume and 20% negative growth in index in capital market, IDLCSL
registered net operating income of BDT 152 million in 2012. Management has put their extra ordinary efort to
restructure the company to cope and adjust with market changes with respect to Branch operations, human
resources and other operational cost. During the year General and administrative expenses decreased by 22%
from BDT 189 million in 2011 to BDT 148 million in 2012. All these restructuring resulted a after tax proft of BDT 81
million in the year 2012 compared an after tax loss of BDT 164 million in 2011.
208
The company commenced its operation in the year 2006 since then the companys yearly average assets growth
was 34% .and yearly equity growth was 122%.
Human Resource Development
IDLCSL strongly believes that its quality human resources are its best assets and recognizes them as building
blocks for Companys performance and development. IDLCSL continues to develop and implement proper Human
resources policies to motivate its employees and ensure their optimum contribution towards the achievement of
the company goals and ethical standard. As IDLCSL believes that human resources give a signifcant competitive
edge in the market, we continue our policy of recruiting the best professionals and implement diferent training
and motivational program to develop and retain high quality human resources.
At the end of 2012, the number of employee in IDLCSL was 80 and in 2011 it was 109. The yearly highlights are as
follows:
HRD Initiatives in 2012:
Development of new MIS for performance management
New MIS for activity reporting
Develop multitasking skill of the staf
Outlook
o Demutualization of Stock Exchanges will be done in FY 2013 which will increase the transparency and
accountability of stock exchange
o Entrance of new issues in the market will create good investment opportunity for the investors.
o More foreign investment is expected to enter in Bangladesh Capital Market due to under valuation of
securities and regulatory liberalization of sell side research.
o Regulator will release more IPO in the FY 2013, 2014 & 2015 to meet up the demand of quality stocks in the
capital market.
o Flow of margin loan in capital market tends to be limited in coming years due to conservative approach of
market participants.
o 2013 might give good opportunity for accumulation for strategic investment
Annual Report 2012
209
Books of Accounts:
Proper books of account of the IDLC Securities Limited have been maintained. Appropriate accounting policies
have been consistently applied in preparation of the fnancial statements and that the accounting estimates are
based on reasonable and prudent judgment. International Accounting Standards (IAS)/ Bangladesh Accounting
Standards (BAS)/ International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards
(BFRS), as applicable in Bangladesh, have been followed in preparation of the fnancial statements and any
departure there-from has been adequately disclosed. The fnancial statements prepared by the management
of IDLC Securities Limited present fairly its state of afairs, the result of its operations, cash fows and changes in
equity.
Internal Control:
The system of internal control is sound in design and has been efectively implemented and monitored.
Distribution of proft for 2012:
The Company made a proft of BDT 80,552,193 after tax in the year 2012. The Board proposed not to pay dividend
to the shareholders for the year 2012.

Appointment of Auditors:
In terms of Article 102 of the Articles of Association of the Company, the Company shall at each annual general
meeting, appoint an auditor or auditors to hold of ce until the next annual general meeting. The Auditors of
the Company M/s Hoda Vasi Chowdhury & Co. Chartered Accountants has completed 2nd year as Auditor of the
Company. They are eligible for re-appointment as Auditors of the Company for the year 2013 and they ofered
themselves also for the re- appointment.
Going Concern:
There are no signifcant doubts upon the IDLC Securities Ltds ability to continue as a going concern.
Appreciation:
I would like to thank my Board colleagues for their continued support and on their behalf I express my heartiest
thank to all IDLC Securities Limited team. I would to acknowledge the exceptional eforts of our employees who
worked in partnership to meet many challenges of a dif cult year. They were called upon to embrace some major
dif culties while at the time maintaining the highest standards of service to our clients.
On behalf of the Board, I would like to thank our loyal clients and honorable shareholders for their trust in IDLC
Securities Limited. Taking this opportunity, the members of the Board also would like to thank Bangladesh
Securities and Exchange Commission, Dhaka & Chittagong Stock Exchanges and Central Depository Bangladesh
Limited who were the partners in the growth of your company.
For and on behalf of the Board of Directors,
Selim R.F. Hussain
Chairman
Annual Report 2012
We have audited the accompanying nancial statements of IDLC SECURITIES LIMITED, which comprises the Statement
of Financial Position as at 31 December, 2012 and the related Statement of Comprehensive Income, Statement of Cash
Flow and Statement of Changes in Equity for the year then ended and a summary of signicant accounting policies and
other explanatory notes.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these nancial statements in accordance with
Bangladesh Accounting Standards (BASs) & Bangladesh Financial Reporting Standards (BFRSs), the Companies Act
1994, and other applicable laws and regulations. This responsibility includes designing, implementing, and maintaining
internal control relevant to the preparation and fair presentation of nancial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors Responsibility
Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit
in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the nancial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial
statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material
misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the nancial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the nancial statements.
opinion.
Opinion:
In our opinion, the Financial Statements prepared in accordance with Bangladesh Accounting Standards (BASs) &
Bangladesh Financial Reporting Standards (BFRSs), give a true and fair view of the state of the companys affairs as at
31 December, 2012 and of the results of its operations and its cash ows for the year then ended and comply with the
Companies Act 1994, and other applicable laws and regulations.
Further to our opinion in the above paragraph, we state that:
(i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary
for the purpose of our audit and made due verication thereof;
(ii) in our opinion, proper books of account as required by law have been kept by IDLC SECURITIES LIMITED, so far
as it appeared from our examination of those books;
(iii) the companys Statement of Financial Position , Statement of Comprehensive Income, Statement of Cash Flow and
Statements of Changes in Equity dealt with by the report are in agreement with the books of account and returns;
(iv) the expenditure incurred was for the purpose of the companys business.
AUDITORS REPORT
TO THE SHAREHOLDERS OF
Section Name.... Section Name.... 211 STATEMENT OF FINANCIAL POSITION
Particulars
BDT BDT
2012 2011
SOURCES OF FUNDS
Share capital 400,000,000 400,000,000
Retained earnings 430,391,227 349,839,079
Shareholder's Equity 830,391,227 749,839,079
APPLICATION OF FUNDS
Non-current assets
Fixed assets (at cost less accumulated depreciation) 41,721,979 71,821,958
Intangible assets 416,851 854,607
Membership at cost 18,676,000 18,676,000
DSE 15,225,000 15,225,000
CSE 3,451,000 3,451,000
Current Assets 1,109,208,036 1,004,907,959
Advances, Deposits and Prepayments 29,746,807 47,788,336
Investment in securities at cost price 36,615,080 152,487,867
Short term loan to IDLCIL 663,500,000 -
Deferred tax assets 14,989,012 10,635,302
Margin loan to clients - 327,307
Accounts receivable 91,543,057 150,769,608
Cash & cash equivalents 272,814,079 642,899,539
Current Liabilities 339,631,639 346,421,445
Accounts payable 258,901,574 243,759,445
Provision for expenses 2,630,330 3,862,308
Provision for tax 70,693,905 52,224,568
Provision for diminution in value of investments 7,405,830 46,575,123
Net Current Assets 769,576,396 658,486,514
Net Assets 830,391,227 749,839,079
Statement of Financial Position
As at December 31, 2012
Managing Director Director
Chairman
Annual Report 2012
212 STATEMENT OF COMPREHENSIVE INCOME
Particulars
BDT BDT
2012 2011
Operating revenue 164,999,928 208,770,194
Brokerage commission 163,534,328 206,986,294
Other operating revenue 1,465,600 1,783,900
Direct expenses 12,760,708 17,583,477
Net operating revenue 152,239,220 191,186,717
Other revenue 90,626,111 (23,290,783)
Capital gain/ (loss) from sale of securities 4,744,257 (101,584,509)
Net interest income 86,178,379 67,644,186
Other non-operating revenue (296,525) 10,649,541
Total revenue 242,865,331 167,895,934
General & administrative expenses 148,280,671 188,936,788
Salaries & allowances 66,325,294 74,830,093
Rent, taxes, insurance, electricity, etc 29,854,395 50,171,838
Legal expenses 3,647,803 5,863,168
Postage, stamp, telecommunication, etc 10,730,305 12,510,427
Stationery, printing, advertisements, etc 2,528,735 4,126,608
Directors' Fees 86,250 115,000
Auditors' Fees 74,750 183,950
Depreciation and repair of company's assets 20,999,168 23,637,780
Other expenses 14,033,971 17,497,924
Proft/ (loss) before provision 94,584,660 (21,040,853)
Proft/ (loss) before provision for income tax 133,753,953 (56,765,210)
Provision for Income tax 53,201,805 107,298,983
Current tax 57,555,516 117,934,285
Deferred tax (4,353,711) (10,635,302)
Net proft/(loss) after tax 80,552,148 (164,064,193)
Statement of Comprehensive Income
For the year ended December 31, 2012
Annual Report 2012
Chairman
Integrity
214
GROUPS SUBSIDIARY - IDLCIL
Annual Report 2012
DIRECTORS REPORT - IDLCIL
The Directors have the pleasure in presenting to the members the Directors Report, the audited fnancial
statements of the company for the year ended December 31, 2012 and auditors report thereon along with capital
market overview, Companys performance and other matters in compliance with Companies Act 1994.
The Companys principal activities are Investment Banking (Issue management, Underwriting, and Corporate
Advisory), Discretionary Portfolio Management and Margin Lending. The company also produces top grade equity
research and publishes it in the Bloomberg.
IDLC Investments Limited provides a high standard of professional and personalized services to its local and NRB
clients. It has proven track record of serving clients satisfying their needs and demand while maintaining strict
compliance with countrys laws and highest ethical standards. IDLC has been treated as one of the top ranking
merchant bankers in the country for its quality investment banking and portfolio management services.
Operational Highlights:
Despite all the market vulnerabilities, the Company registered profts before provision for investment and tax
of BDT 85.95 million in 2012 where operating revenue and expense are BDT 182.66 million and BDT 74.4 million
respectively for the Year. During the year, market capitalization as well as turnover witnessed signifcant drop
impacting our management fees, transaction and settlement fees. We also kept growth of margin loan basket
restrained in order to minimize the downfall risks.
Investment Banking:
During 2012, IDLC Investments Limited signed two Issue Management Agreements. One of them is with
Energypac Confdence power Venture Limited which is a Joint venture of Energypac Power Generation Limited
and Confdence Cement Limited. The company is engaged in power generation, distribution and maintenance
of power plants on BOO basis. The other company is a 100% export oriented RMG concern established by a
group of renowned entrepreneurs. Besides, IDLCIL had the privilege to associate itself with Brummers Frontier PE
(Mauritius) Limited to assist them in making long-term equity investment in Popular Pharmaceuticals Limited, one
of the renowned pharmaceutical companies of the country. Also we are assisting one of the largest Fast Moving
Consumer Goods (FMCG) companies in Bangladesh in raising capital. In FY2012, IDLCIL has also completed the
issue management deal of GBB Power Limited, an Independent Power Producer (IPP) of the country, which raised
BDT 820 million from the capital market. We have also provided corporate advisory service to Nuvista Pharama
Limited to assist them raise capital internally through right share issuance. Currently, IDLCIL is working as issue
manager of several proposed IPOs. During the Year IDLCIL also signed several underwriting deals.
During the year of volatility and pessimism investors in the secondary market afected the primary market
severely. In view of the above, Bangladesh Security and Exchange Commission (BSEC) also took some conservative
measures to protect the interest of the small investors and was reluctant to pursue IPOs with premium. For these
reasons, issue managers including IDLCIL failed to proceed with many of the prospective issue management deals.
During last quarter of 2012, market participants became more enthusiastic about newly listed stocks resulting in
signifcant rise of the stock prices over their ofer price. BSEC also began to give approval to IPOs with premium.
Research
At IDLCIL, we encourage and uphold discipline in investment through rigorous Buy-side Research in the investment
arena. Our Research coverage includes but not limited to listed companies, sector and economy of Bangladesh. Our
qualifed and dedicated professionals provide insightful opinion on market, sector and specifc sript to facilitate
investment decision. Our footprint reached at global village through information hubs like Bloomberg along with
frequent publications in local media and IDLC website.
(A Fully owned subsidiary of IDLC Finance Limited)
215 DIRECTORS REPORT - IDLCIL
Annual Report 2012
Discretionary Portfolio Management (DPM):
2012 was a challenging time for the fund managers as the market was volatile and DSE General Index sufered a
fall of 20%. Our prime focus was to retain the client and to protect their capital. In addition, we concentrated more
on capacity building, product development, training, development of value added services, conducting investor
awareness program and having more public relationships. Besides MAXCAP, we added three new products -- Proft
and Loss Account Services, Capital Protected Scheme, and Portfolio Advisory Services under DPM. This efort
hopefully will bring good revenue in future and will put us in a competitively advantageous position.
Margin Loan product (IDA):
We have taken few strategies to control and monitor the exposure of margin loan amount. In principle, the
company did not increase the limit of margin loan exposure rather tried to bring down over the year. A few of the
policy initiatives were:

A. Margin Loan Reduction Policy:-
Freezing new account opening to limit the new exposure in margin loan.
Following dynamic netting policy to adjust the loan amount gradually for every trade of Investor with negative
purchase power.
Lowering loan ratio to keep the margin exposure in line with the market situation and our risk appetite.
Equity wise margin ratio to lower our exposure to small equity investors who cannot practically diversify their
portfolio.
Managing a prudent list of marginable securities allowing margin exposure in fundamentally strong scrips.
Single party exposure limit to keep margin basket diversifed among a large number of investors.
B. Risk Mitigation under Distress Account Management (DAM) by ofering:
100% netting for purchasing stocks from the list of defensive and growth stocks.
Allowing purchase on cash deposit.
Manage IDA clients portfolio as discretionary with the consent of a client.
Financial Highlights
Despite all vulnerabilities, IDLC Investments Limited earned Taka 85.96 Million in 2012 as proft before provision for
investment and tax. The following table shows further breakdown of revenue streams from diferent products.
A1: Portfolio Operations
(Amount in BDT)
Operational Revenue Cap Invest MaxCap Total
Net Interest Income 40,324,239 102,832 40,427,071
Portfolio Management Services 82,399,313 12,072,820 94,472,133
Settlement and Transaction Fees 26,935,726 7,222,491 34,158,217
Documentation Fees 16,000 9,500 25,000
Total Operational Revenue 149,675,278 19,407,643 169,082,921
216
Annual Report 2012
During 2012 portfolio management services was the main stream of revenue dynamism in both Cap Invest and
MaxCap; whereas net interest income was the main stream of revenue dynamism of same product in 2011.
A2: Investment Banking
Investment Banking Amount in BDT
Issue Management Fees 3,000,000
Corporate Advisory Fees 9,101,000
Underwriting 746,400
Total Revenue from Investment
Banking
12,847,400
Revenue from Investment Banking was Taka 12.85 Million,
where signifcant contribution was mainly from Corporate
Advisory Fees followed by Issue Management Fees. Due to
market turmoil, some of the pipeline deals could not be closed
B) Operational Expenses
Operational Expenses Amount in BDT
Salary and Allowances 44,413,370
General & administrative expenses 30,008,818
Total Operational Expenses 74,422,188
Human Resource Development
IDLC strongly believes that its human resources are its fnest assets and recognize them as building blocks on
which the Companys performance and development are based upon. IDLC continues to develop and implement
proper human resource policies to motivate its employees and ensure their optimum contribution towards the
achievement of the company goals. As the human resources of IDLC give the Company a signifcant competitive
edge in the market, the Company continues its policy of recruiting the best professionals and implement diferent
training and motivational program to develop and retain high quality employees.
217
Annual Report 2012
Number of Permanent Employees:
No of Employees 2012
Male 39
Female 9
Total 48
As part of IDLCs Human Resource Development Program, a
large number of employees were sent to diferent training
programs, which included both managerial development and
technical modules. During 2012,145 employees were trained
locally in 16 diferent training courses. The total cost for all training programs was BDT 0.17 mn in the year 2012.
Future Outlook
Volatility of the secondary market may hamper the primary market.
Capital rising has emerged as a new revenue source of the issue management Company.
2013 will give good opportunity for accumulation for strategic investment
Advisory Service for investors can open up new avenue of product oferings
Maintain leadership position in Investment Banking.
Positioning our Research works as No. 1 in the market.
Managing the downside risk of Margin Loan.
Aggressive selling discretionary portfolio management (DPM) product through sales & marketing team.
Books of Accounts:
Proper books of account of the IDLC Investments Limited have been maintained. Appropriate accounting policies
have been consistently applied in preparation of the fnancial statements and that the accounting estimates are
based on reasonable and prudent judgment. International Accounting Standards (IAS)/Bangladesh Accounting
Standards (BAS)/International Financial Reporting Standards (IFRS)/Bangladesh Financial Reporting Standards
(BFRS), as applicable in Bangladesh, have been followed in preparation of the fnancial statements and any
departure therefrom has been adequately disclosed. The fnancial statements prepared by the management of
IDLC Investments Limited present fairly its state of afairs, the result of its operations, cash fows and changes in
equity.
Internal Control:
The system of internal control is sound in design and has been efectively implemented and monitored.
Distribution of Proft for 2012:
The Company made a proft of BDT 42,181,507 in the year 2012. The Board proposed not to pay any dividend to the
shareholders for year 2012.
218
Appointment of Auditors:
In terms of Article 18.2 of the Articles of Association of the Company, the Company shall at each annual general
meeting, appoint an auditor or auditors to hold of ce until the next annual general meeting. The Auditors of
the Company M/s Hoda Vasi Chowdhury & Co. Chartered Accountants has completed 2nd year as Auditor of the
Company. They are eligible for re-appointment as Auditors of the Company for the year 2013 and they have also
ofered themselves for re-appointment.
Going Concern:
There are no signifcant doubts upon the IDLC Investments Limiteds ability to continue as a going concern.
Appreciation:
I would like to thank my Board colleagues for their continued support and on their behalf would like to express
my heartiest thanks to entire IDLC Investments Limited team. It would be remiss if we do not acknowledge the
exceptional eforts of our employees who worked in partnership to meet many challenges of a dif cult year. They
were called upon to embrace some major challenges while at the same time maintained the highest standards of
service to our clients. They met the challenges and we thank each of them for their extraordinary performance.
Finally, on behalf of the Board, I would like to thank our loyal clients and honourable shareholders for their
continued support to IDLC Investments Limited. Taking this opportunity, the members of the Board also like to
thank Securities and Exchange Commission, Dhaka & Chittagong Stock Exchanges, Central Depository Bangladesh
Limited who were the partners in the growth of your company.
For and on behalf of the Board of Directors,
Selim R.F. Hussain
Chairman
Annual Report 2012
AUDITORS REPORT
TO THE SHAREHOLDERS
OF
We have audited the accompanying nancial statements of IDLC INVESTMENTS LIMITED(IDLCIL), which comprises
the statement of nancial position as at 31 December, 2012, related statement of comprehensive income, statement of
cash ow and statement of changes in equity for the year then ended, and a summary of signicant accounting policies
and other explanatory notes.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these nancial statements in accordance with
Bangladesh Accounting Standards (BASs) & Bangladesh Financial Reporting Standards (BFRSs), the Companies Act
1994 and other applicable laws and regulations. This responsibility includes: designing, implementing, and maintaining
internal control relevant to the preparation and fair presentation of nancial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors Responsibility
Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit
in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the nancial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial
statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material
misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the nancial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the nancial statements.
opinion.
Opinion:
In our opinion, the Financial Statements prepared in accordance with Bangladesh Accounting Standards (BASs) &
Bangladesh Financial Reporting Standards (BFRSs), give a true and fair view of the state of the companys affairs as at
31 December, 2012 and of the results of its operations for the year then ended and comply with the Companies Act 1994
and other applicable laws and regulations.
Further to our opinion in the above paragraph, we state that:
(i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary
for the purpose of our audit and made due verication thereof;
(ii) in our opinion, proper books of account as required by law have been kept by IDLCIL, so far as it appeared from
our examination of those books;
(iii) IDLCILs Statement of Financial Position, Statement of Comprehensive Income, Statement of Cash Flow and
Statement of Changes in Equity dealt with by the report are in agreement with the books of account and returns.
(iv) the expenditure incurred was for the purpose of the IDLCILs business.
220 STATEMENT OF FINANCIAL POSITION
Annual Report 2012
Particulars
BDT BDT
2012 2011
ASSETS
Non current assets:
Property, plant and equipment Net of Accumulated depreciation 23,578,993 22,785,767
Intangible Assets 332,547 524,794
23,911,539 23,310,561
Deferred tax - assets 810,937 104,993
Investment in marketable securities 145,733,465 -
Current assets:
Margin loan to portfolio clients 4,602,653,254 4,726,534,315
Account Receivables 160,595,612 94,196,255
Advance, Prepayments & Deposits 42,400 55,000
Advance Income Tax (AIT) 48,116,465 737,665
Cash and cash Equivalents 22,371,916 85,228,402
4,833,779,647 4,906,751,637
Total Assets 5,004,235,589 4,930,167,191
Equity and Liabilities
Shareholders' equity:
Share capital 400,000,000 400,000,000
Accumulated proft 103,186,577 60,117,768
503,186,577 460,117,768
Deferred Liabilities - Gratuity payable 2,883,934 2,579,472
Current liabilities:
Borrowing from Banks and Financial Institutions 2,946,156,960 3,669,276,020
Borrowing from af liate company 663,500,000 -
Portfolio investors' fund 700,243,097 491,320,832
Accounts Payables 46,710,272 250,456,907
Accruals and Provisions 83,961,785 35,925,510
Other Liabilities 31,866,052 3,880,235
Inter-company account 25,726,913 16,610,449
4,498,165,078 4,467,469,953
5,004,235,589 4,930,167,191

Statement of Financial Position
As at 31 December 2012
Chairman
221 STATEMENT OF COMPREHENSIVE INCOME
Annual Report 2012
Particulars
BDT BDT
2012 2011
Interest Income 605,979,561 283,433,742
Interest Expenses (565,552,490) (240,680,939)
Net Interest Income 40,427,072 42,752,803
Income from Portfolio Management services 94,472,132 51,444,501
Settlement and Transaction Fees 34,158,217 10,934,975
Documentation Charges 25,500 22,500
Income from Investment Banking 12,847,400 11,950,000
Investment Income 8,938,977 -
Other income 727,580 12,625,817
151,169,807 86,977,794
Operating Income 191,596,878 129,730,597
General and Administrative expenses (74,502,188) (31,137,615)
Net operating income 117,094,690 98,592,982
Provision for Investments
Provision for diminution in value of investments (31,226,270) -
Proft before provision and tax 85,868,420 98,592,982
Tax (expense)/income:
Current (43,505,555) (36,972,368)
Deferred 705,944 104,993
(42,799,611) (36,867,375)
Proft after tax for the year 43,068,809 61,725,607
Statement of Comprehensive Income
For the year ended 31 December 2012
Chairman
222
Annual Report 2012
Section Name....
Passion
223
STAKEHOLDERS CORNER
Annual Report 2012
DISCLOSURES UNDER PILLAR III-MARKET DISCIPLINE
A) Scope of application
Qualitative Disclosures:
The name of the top corporate entity in the group to which this guidelines applies. (a)
An outline of diferences in the basis of consolidation for accounting and regulatory purposes, with a brief (b)
description of the entities within the group (a) that are fully consolidated; (b) that are given a deduction
treatment; and (c) that are neither consolidated nor deducted (e.g. where the investment is risk-weighted).
The IDLC Group has two wholly owned subsidiaries: IDLC Securities Limited and IDLC Investments
Limited, which are fully consolidated.
Any restrictions, or other major impediments, on transfer of funds or regulatory capital within the group. (c)
Not applicable.
Quantitative Disclosures:
The aggregate amount of capital defciencies in all subsidiaries not included in the consolidation that are (d)
deducted and the name(s) of such subsidiaries.
Capital defciency of IDLC Investments limited is included in consolidation.
B) Capital structure
Qualitative Disclosures
Summary information on the terms and conditions of the main features of all capital instruments, especially (a)
in the case of capital instruments eligible for inclusion in Tier 1 or in Tier 2.
Tier 2 capital includes:
i) General provision up to a limit of 1.25% of Risk Weighted Asset (RWA) for Credit Risk;
ii) Revaluation reserves:
50% Revaluation reserve for fxed assets;
45% Revaluation reserve for securities;
iii) All other preference shares.
Conditions for maintaining regulatory capital:
The calculation of Tier 1 capital, and Tier 2 capital, shall be subject to the following conditions:
i) The amount of Tier 2 capital will be limited to 100% of the amount of Tier 1 capital.
ii) 50% of revaluation reserves for fxed assets and 45% of revaluation reserves for securities are eligible for
Tier 2 capital.
Disclosures under
Pillar III-Market Discipline
224
STAKEHOLDERS CORNER
Annual Report 2012
The amount of Tier 1 capital, with separate disclosure of: (b)
Particulars Amount in crore Taka
Paid up capital 123.75
Non-repayable share premium account 0.38
Statutory reserve 84.11
General reserve 81.13
Retained earnings 175.24
Minority interest in subsidiaries 0.00
Non-cumulative irredeemable preference shares -
Dividend equalization account 4.65
Total Tier 1 capital 469.26
(c) The total amount of Tier 2 capital 31.54
(d) Other deductions from capital -
(e) Total eligible capital 500.78
C) Capital Adequacy
(a) A summary discussion of the FIs approach to assessing the adequacy of its capital to support current and
future activities.
Risk Weighted Assets (RWA) and Capital Adequacy Ratio (CAR)
IDLC has adopted Standardized Approach for computation of Capital Charge for Credit Risk and Market Risk
while Basic Indicator Approach for Operational Risk. Total Risk Weighted Assets (RWA) of the Company is
determined by multiplying the capital charge for market risk and operational risk by the reciprocal
of the minimum capital adequacy ratio i.e. 10% as on December 2011 and adding the resulting fgures to
the sum of risk weighted assets for credit risk. Total RWA is then used as denominator while total Eligible
Regulatory Capital as on numerator to derive Capital Adequacy Ratio.
Strategy to achieve the required Capital Adequacy:
Operational level:
Immediate measures:
Asking unrated Corporate clients to have credit rating from External Credit Assessment Institutions (ECAIs)
recognized by Bangladesh Bank;
Rigorous monitoring of overdue contracts to bring those under 90 days overdue;
Assessing incremental efect of capital charge over the expected net income from fnancing before
sanctioning any appraisal, which could be one of the criteria for taking fnancing decision.
225
STAKEHOLDERS CORNER
Annual Report 2012
Continuous measures:
Concentrating on SME clients having exposure up to BDT 1 crore as this will carry 75% fxed risk weight (for
regular contracts only);
Financing clients having good credit rating;
Using beneft of credit risk mitigation by taking eligible fnancial collaterals against transactions;
Focusing more on booking high spread earning assets and thus increasing retained earnings.
Strategic level:
Injecting fresh capital by issuing right shares, if required.
Quantitative Disclosures Amount in crore Taka
(b) Capital requirement for Credit Risk 315.13
(c) Capital requirement for Market Risk 7.69
(d) Capital requirement for Operational Risk 38.00
(e) Total and Tier 1 capital ratio:
For the consolidated group; and
For stand alone
Particular Consolidated Solo
CAR on Total capital basis (%) 13.88 12.63
CAR on Tier 1 capital basis (%) 13.01 11.66
D) Credit Risk
(a) The general qualitative disclosure requirement with respect to credit risk, including:
Defnitions of past due and impaired (for accounting purposes)
As per the Bangladesh Banks Prudential Guideline on Capital Adequacy and Market Discipline for Financial
Institutions, the unsecured portion of any claim or exposure (other than claims secured by residential
property) that is past due for 90 days or more, net of specifc provisions (including partial write-of) will
be risk weighted as per risk weights of respective balance sheet exposures. For the purpose of defning
the net exposure of the past due loan, eligible fnancial collateral (if any) may be considered for Credit Risk
Mitigation.
Description of approaches followed for specifc and general allowances and statistical methods;
Specifc and General provisions are maintained according to the relevant Bangladesh Bank guideline. For
Example, 1% provision is maintained against good loans, 5% against SMA loans, 20% against sub-standard,
50% against doubtful and 100% against bad/loss loans after deducting the amount of interest expenses and
value of eligible securities from the outstanding balance of classifed accounts.
226
STAKEHOLDERS CORNER
Annual Report 2012
Discussion of the FIs credit risk management policy.

Implementation of various strategies to minimize risk:
To encounter and mitigate credit risk the following control measures are taken place at IDLC:
Looking into payment performance of customer before fnancing;
Annual review of clients;
Adequate insurance coverage for funded assets;
Vigorous monitoring and follow up by Special Assets Management and collection Team;
Strong follow up of compliance of credit policies by Credit Administration Department;
Taking collateral and performing valuation and legal vetting on the proposed collateral;
Seeking legal opinion from internal and external lawyer for any legal issues;
Maintaining neutrality in politics and following arms length approach in related party
transactions;
Regular review of market situation and industry exposure;
Sector-wise portfolio is maintained within specifc limits to ensure diversifcation of loan
assets.
In addition to the industry best practices for assessing, identifying and measuring risks, IDLC also considers
Guidelines for Managing Core Risks of fnancial institutions issued by the Countrys Central Bank, Bangladesh
Bank; vide FID Circular No. 10 dated September 18, 2005 for management of risks.
Approved Credit Policy by the Board of Directors
The Board of Directors has approved the Credit Policy for the company where major policy
guidelines, growth strategy, exposure limits (for particular sector, product, individual company
and group) and risk management strategies have been described/stated in detail. Credit Policy is
regularly updated to cope up with the changing global, environmental and domestic economic
scenarios.
Separate Credit Risk Management (CRM) Department
An independent Credit Risk Management (CRM) Department is in place, at IDLC, to scrutinize
projects from a risk-weighted point of view and assist the management in creating a high quality
credit portfolio and maximize returns from risk assets. Research team of CRM regularly reviews
market situation and exposure of IDLC in various industrial sub-sectors. CRM has been segregated
from Credit Administration Department in line with Central Banks Guidelines. CRM assess credit
risks and suggest mitigations before recommendation of every credit proposal while Credit
Administration confrms that adequate security documents are in place before disbursement.
Special Assets Management and Collection Team
A strong Law and Recovery Team monitors the performance of the loans & advances, identify early
signs of delinquencies in portfolio, and take corrective measures to mitigate risks, improve loan
quality and to ensure recovery of loans in a timely manner including legal actions.
227
STAKEHOLDERS CORNER
Annual Report 2012
Independent Internal Control and Compliances Department (ICC)
Appropriate internal control measures are in place at IDLC. IDLC has also established Internal
Control and Compliances Department (ICC) to ensures, compliance with approved lending
guidelines, Bangladesh Bank guidelines, operational procedures, adequacy of internal control and
documentation procedures. ICC frames and implements policies to encounter such risks.
Credit Evaluation
The Credit Evaluation Committee (CEC) regularly meets to review the market and credit risk related
to lending and recommend and implement appropriate measures to counter associated risks. The
CEC critically reviews projects considering the current global fnancial crisis and its probable impact
on the project.
Risk Grading Model (RGM) helps a Financial Institution to understand the various dimensions of
risks involved in transactions related to small business clients who are plying their businesses in
various geographical locations across the country. IDLC has been developing and managing RGM
to promote the safety and soundness of the Company by facilitating informed decision-making.
This model measures credit risk and diferentiate individual credits and groups of credits by the risk
they pose. This allows management and examiners to monitor changes and trends in risk levels.
The process also allows the management to manage risk to optimize returns.
To mitigate credit risk, IDLC search for credit report from the Credit Information Bureau (CIB) of
Bangladesh Bank. The report is scrutinized by CRM and CEC to understand the liability condition
and repayment behavior of the client. Depending on the report, bankers opinions are taken from
clients banks. Suppliers and buyers opinion are taken to understand the market position and
reputation of our proposed customers.
Credit Approval Process
To ensure both speedy service and mitigation of credit risk, the approval process is maintained
through a multilayer system. Depending on the size of the loan, a multilayer approval system is
designed. As smaller loans are very frequent and comparatively less risky, lower sanctioning
authority is set to improve the turnaround time and associated risk. Bigger loans require more
scrutiny as the associated risk is higher. So sanctioning authority is higher as well.
Credit Quality and Portfolio Diversifcation
IDLC believes in diversifcation in terms of products as well as sectors. To mitigate the Credit
Risk, the company diversifes its loan exposure to diferent sectors confrming the Central Banks
requirements. Threshold limit is set for any sector so that any adverse impact on any industry
has minimum efect on IDLCs total return. Central Banks instructions are strictly followed in
determining Single Borrower/Large Loan limit. Signifcant concentration of credit in terms of
groups or geographical location is carefully avoided to minimize risk.
Early Warning System
Performance of loans is regularly monitored to trigger early warning system to address the loans
and advances whose performance show any deteriorating trend. It enables the company to grow
its credit portfolio with ultimate objective to protect the interest of stakeholders.
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STAKEHOLDERS CORNER
Annual Report 2012
NPL Management
IDLC measures its loan portfolio in terms of payment arrears. The impairment levels on the loans
and advances are monitored regularly.
As per FID Circular No.3 dated March 15, 2007:
1. Loan/Lease, classifed as bad/loss and with 100% provision, can only be written-of.
2. Approval from the Board of Directors has to be taken before write-of.
3. The fnancial institutions should constantly try to recover the loan/lease written-of amount. If
legal action has not been taken against the client, legal charges should be placed before the
write of.
4. To expedite the legal settlement or collection of the due amount, third party agents can be
appointed by the fnancial institutions.
5. A separate ledger should be maintained for the written of loans/leases and the accumulated
written of value should be disclosed separately under the heading of notes to the account in
the annual report/balance sheet of the fnancial institutions.
6. Even if the loan/lease has been written of, the client should be classifed as defaulter and
reported to CIB accordingly.
Detail records for all such write of accounts are meticulously maintained and followed up.
Counterparty Credit Rating
IDLC is taking initiatives to rate the Corporate Clients of the company immediately by the External
Credit Assessment Institutions (ECAIs)/Rating Agencies duly recognized by the Central Bank. Some
corporate clients have already conducted their credit rating by ECAIs and we are optimistic of
getting a signifcant number of counter party ratings by 2013.
Methods used to measure Credit Risk
As per the directives of Bangladesh Bank, The Standardized approach is applied by the company
to measure its Credit Risk.
Quantitative Disclosures
(b) Total gross credit risk exposures broken down by major types of credit exposure.
Leasing 547.92
Long-term fnance 1,185.90
Real estate fnance 826.21
Car loan 40.87
Personal loan 18.76
Margin loan to portfolio investors 460.27
Short term fnance 58.13
Loan against deposit 82.24
Interest receivable 39.22
Total 3,259.52
229
STAKEHOLDERS CORNER
Annual Report 2012
(c) Geographical distribution of exposures, broken down in signifcant areas by major types of credit exposure.
Area Amount in crore Taka
Dhaka 2,522.12
Chittagong 447.35
Bogra 56.24
Sylhet 85.11
Savar 32.32
Comilla 43.41
Jessore 23.74
Narsingdi 49.23
Total 3,259.52
(d) Industry or counterparty type distribution of exposures, broken down by major types of credit exposure.
Sector Amount in crore Taka
Apparels & Accessories 200.50
Agro Based Industry 57.10
Building & Construction 126.32
Education 22.38
Food and Beverage 181.39
Household Products & Home Appliances 103.93
Housing & Real Estate 113.66
Iron & Steel 131.91
Information Technology 37.29
Packaging 35.57
Power & Energy 68.68
Pharmaceuticals 121.89
Paper & Paper Products 47.95
Financial Services 35.95
Service 126.48
Transport 152.15
Textiles 143.76
Others 132.64
Total 1,839.54
Beside this, total consumer fnance (which includes individual Home Loan, Car Loan and Personal Loan)
amounts to BDT 959.71 crore and Margin Loan to Portfolio Investors amounts to BDT 460.27 crore. Therefore,
the total Industry exposure amounts to BDT 3,259.52 crore.
230
STAKEHOLDERS CORNER
Annual Report 2012
(e) Residual contractual maturity breakdown of the whole portfolio, broken down by major types of credit
exposure.
Repayable on demand -
Over 1 month but not more than 3 months 300.79
Over 3 months but not more than 1 year 1,093.35
Over 1 year but not more than 5 years 1,470.72
Over 5 years 394.66
Total 3,259.52

(f ) Gross Non Performing Assets ( NPAs)
Non Performing Assets ( NPAs) to Outstanding Loans & advances
Movement of Non Performing Assets (NPAs)
Movement of Non Performing Assets ( NPAs) Amount in BDT crore Taka
Opening balance 59.38
Additions 31.52
Reductions (26.38)
Closing balance 64.52
Movement of specifc provisions for NPAs
Movement of specifc provisions for NPAs Amount in BDT crore Taka
Opening balance 47.92
Provisions made during the period 10.77
Write-of (15.72)
Write-back of excess provisions (6.09)
Closing balance 36.89
E) Equities: banking book positions
The general qualitative disclosure requirement with respect to equity risk, including: (a)
Diferentiation between holdings on which capital gains are expected and those taken under other objectives
including for relationship and strategic reasons; and
Total equity shares holdings are for capital gain purpose.
Discussion of important policies covering the valuation and accounting of equity holdings in the banking
book positions. This includes the accounting techniques and valuation methodologies used, including key
assumptions and practices afecting valuation as well as signifcant changes in these practices.
231
STAKEHOLDERS CORNER
Annual Report 2012
Quoted shares are valued at cost prices and if the total cost of a particular share is lower than the market
value of that particular share, then provision are maintained as per terms and condition of regulatory
authority. On the other hand, unquoted share is valued at cost price or book value as per latest audited
accounts.
Value disclosed in the balance sheet of investments, as well as the fair value of those investments; for quoted (b)
securities, a comparison to publicly quoted share values where the share price is materially diferent from
fair value.
Amount in crore Taka
Quoted shares 32.79
Unquoted shares 51.97
The cumulative realized gains (losses) arising from sales and liquidations in the reporting period. (c)
- Nil
(d)
Total unrealized gains (losses) 5.36
Total latent revaluation gains (losses) -
Any amounts of the above included in Tier 2 capital. -
Capital requirements broken down by appropriate equity groupings, consistent with the FIs methodology, (e)
as well as the aggregate amounts and the type of equity investments subject to any supervisory provisions
regarding regulatory capital requirements.
Specifc Risk- Market value of investment in equities is BDT 38.43 crore. Capital Requirement is 10%
of the said value which stand to BDT 3.84 crore.
General Risk- Market value of investment in equities is BDT 38.43 crore. Capital Requirement is 9% of
the said value which stand to BDT 3.84 crore.
F) Interest rate in the banking book
The general qualitative disclosure requirement including the nature of interest risk and key assumptions, (a)
including assumptions regarding loan prepayments and behavior of non-maturity deposits.
Interest rate risk in the banking book arises from mismatches between the future yield of an assets and
their funding cost. Assets Liability Committee (ALCO) monitors the interest rate movement on a regular
basis. IDLC measure the Interest Rate Risk by calculation Duration Gap i.e. a positive Duration Gap afect
companys proftability adversely with the increment of interest rate and a negative Duration Gap increase
the companys proftability with the reduction of interest rate.
232
STAKEHOLDERS CORNER
Annual Report 2012
The increase (decline) in earnings or economic value (or relevant measure used by management) for upward (b)
and downward rate shocks according to managements method for measuring interest rate risk broken
down by currency (as relevant).
(BDT in million, Where applicable)
Maturity wise Distribution of Assets-Liabilities
Particulars
1 to 30/31
day (One
month)
Over 1
month to 2
months
Over 2
months to
3 months
Over 3
months to
6 months
Over 6
months to
1 year
1 2 3 4 5 6
A. Total Rate Sensitive Liabilities (A) 171.87 223.86 182.56 699.10 689.55
B. Total Rate Sensitive Assets (B) 170.13 68.19 122.47 259.37 481.86
C. Mismatch -1.73 -155.67 -60.09 -439.73 -207.69
D. Cumulative Mismatch -1.73 -157.40 -217.49 -657.22 -864.91
E. Mismatch (%) -1.01% -69.54% -32.91% -62.90% -30.12%
Interest Rate Risk - Increase in Interest Rate
Magnitude of Shock
Minor Moderate Major
2% 4% 6%
Change in the Value of Bond Portfolio 0.28 0.55 0.83
Net Interest Income -17.30 -34.60 -51.89
Revised Regulatory Capital 483.76 466.73 449.71
Risk Weighted Assets 3608.14 3608.14 3680.14
Revised CAR (%) 13.41% 12.94% 12.46%
G) Market risk
Views of BOD on trading/investment activities (a)
All the Market Risk related policies/guidelines are duly approved by BOD. The BOD sets limit and review and
updates the compliance on regular basis aiming to mitigate the Market risk.
Methods used to measure Market risk
Market Risk is the probability of losing assets in balance sheet and of- balance sheet position arising out of
volatility in market variables i.e. interest rate, exchange rate and prices of securities. In order to calculate the
market risk for trading book purposes the company uses Standardized (rule based) Approach where capital
charge for interest rate risk, price and foreign exchange risk is determined separately.
233
STAKEHOLDERS CORNER
Annual Report 2012
Market Risk Management system
Policies and processes for mitigating market risk
A Policy for managing Market Risk has been set out by the Board of Directors of the company where clear
instructions has been given on Loan Deposit Ratio, Whole Sale Borrowing Guidelines, Medium Term Funding,
Maximum Cumulative Outfow, Liquidity Contingency Plan, Local Regulatory Compliance, Recommendation
/ Action Plan etc. Treasury manages the Market Risk with the help of Asset Liability Management
Committee (ALCO) and Asset Liability Management (ALM) Desk in the following fashion:
Interest Risk Management
Treasury Division reviews the risks of changes in income of the Company as a result of movements in market
interest rates. In the normal course of business, IDLC tries to minimize the mismatches between the duration
of interest rate sensitive assets and liabilities. Efective Interest Rate Risk Management is done as under:
Market analysis
Market analysis over interest rate movements are reviewed by the Treasury of the company. The type
and level of mismatch interest rate risk of the company is managed and monitored from two perspectives,
being an economic value perspective and an earning perspective.
GAP analysis
ALCO has established guidelines in line with central Banks policy for the management of assets and liabilities,
monitoring and minimizing interest rate risks at an acceptable level. ALCO in its regular monthly meeting
analyzes Interest Rate Sensitivity by computing GAP i.e. the diference between Rate Sensitive Assets and
Rate Sensitive Liability and take decision of enhancing or reducing the GAP according to prevailing market
situation aiming to mitigate interest rate risk.
Continuous Monitoring
Companys treasury manages and controls day-to-day trading activities under the supervision of ALCO that
ensures continuous monitoring of the level of assumed risks.
Equity Risk Management
Equity Risk is the risk of loss due to adverse change in market price of equities held by the Company. Equity
Risk is managed by the following fashion:
IDLC minimizes the Equity Risks by Portfolio diversifcation as per investment policy of the company. The
entire portfolio is managed by IDLC Investments Limited.
The capital requirements for Market Risk: (b)
Particular Amount in BDT crore
Interest rate risk -
Equity position risk 7.69
Foreign Exchange Position and Commodity risk (if any). -
234
STAKEHOLDERS CORNER
Annual Report 2012
H) Operational Risk:
Qualitative disclosure:
(a) Views of Board on system to reduce Operational Risk:
All the policies and guidelines of internal control and compliances are duly approved by the Board. The
Board delegates its authority to Executive Committee and to ManCom members as per company policy of
delegation of authority. Audit Committee of the Board directly oversees the activities of internal control and
compliance as per good governance guideline issued by Securities and Exchange Commission.
Performance gap of executives and stafs
IDLCs recruitment strategy is based on retaining and attracting the most suitable people at all levels of the
business and this is refected in our objective approach to recruitment and selection. The approach is based
on the requirements of the job (both now and in the near future), matching the ability and potential of the
individual. Qualifcation, skills and competency form our basis for nurturing talent. We are proud to state
that favorable job responsibilities are increasingly attracting greater participation from diferent level of
employees in the IDLC family. We aim to foster a sense of pride in working for IDLC and to be the employer
of choice. As such thee exists no performance gap in IDLC.
Potential external events
No such potential external event exist to rise operational risk of IDLC at the time of reporting.
Polices and procedures for mitigating operational risk:
IDLC has also established Internal Control and Compliances Department (ICC) to address operational risk and
to frame and implement policies to encounter such risks. ICC assesses operational risk across the Company
as a whole and ensures that an appropriate framework exists to identify, assess and mange operational
risk.
Approach for calculating capital charge for operational risk:
Opreational risk is defned as the risk of loss resulting from inadequate or failed internal processes, people
and system or from external events. IDLC uses basic indicator approach for calculation capital charge against
operational risk i.e. 15% of average positive annual gross income of the company over last three years.
(b) Capital requirement for operational risk:
Particular Amount in crore Taka
Capital requirement for operational risk: 38.00
235
IDLC is very much concern of the stakeholders interest on the company including the potential investors. IDLC with
26 years of fnancial expertise helps its clients to decide in taking right fnancial decisions. The following historical
information will help our current and potential investors for their decision making:
Financial calendar to the stakeholders
Events for the year 2012 2011
Publication of Financial Statements for the 1st Quarter May 14, 2012 May 12, 2011
Publication of Financial Statements for the Half-year July 18, 2012 July 27, 2011
Publication of Financial Statements for the 3rd Quarter October 23, 2012 October 27, 2011
Annual Financial statements approved by the Board February 14, 2013 February 22, 2012
Date of Record February 28, 2013 March 6, 2012
Dispatching notice for the Annual General meeting along with
the Annual Report by March 10, 2013 March 11, 2012
Holding of Annual General Meeting March 25, 2013 March 29, 2012
Transfer/ payment of Dividend by April 30, 2013 April 30, 2012
Comparative Shareholding Structure of IDLC as on December 31
Types of Share Holders
2012 2011
No. of Shares % of Shares No. of Shares % of Shares
Sponsor/Director 78,975,711 63.82 63,180,570 63.82
Institutions 17,875,673 14.44 14,490,320 14.64
Individuals 26,898,616 21.74 21,329,110 21.54
Total shares held 123,750,000 100 99,000,000 100
Top ten shareholders of IDLC as on December 31
Sl. No. Name of the shareholders
2012 2011
No. of
shares held
% of Issued
shares
No. of
shares held
% of Issued
shares
1 The City Bank Limited 35,103,537 28.37 28,082,830 28.37
2 Eskayef Bangladesh Limited 9,900,000 8.00 7,920,000 8.00
3 Sadharan Bima Corporation 9,428,512 7.62 7,542,810 7.62
4 Mercantile Bank Limited 9,281,250 7.50 7,425,000 7.5
5 Reliance Insurance Co. Limited 8,662,500 7.00 6,930,000 7
6 Transcraft Limited 4,966,412 4.01 3,973,130 4.01
7 Bangladesh Fund 3,958,387 3.20 3,150,310 3.18
8 Bangladesh Lamps Limited 1,633,500 1.32 1,306,800 1.32
9 Pubali Bank Limited 1,412,600 1.14 - -
10 Eastern Bank Limited 1,362,500 1.10 2,163,400 2.19
Information for the Stakeholders
STAKEHOLDERS CORNER
Annual Report 2012
INFORMATION FOR THE STAKEHOLDERS
236
Equity statistics of IDLC important to the stakeholders:
Particulars 2008 2009 2010 2011 2012
Number of shares in issue (No.) 2,500,000 3,000,000 6,000,000 99,000,000 123,750,000
Net asset value per share (BDT) 16.28 24.17 37.27 40.21 47.41
Market Capitalization (BDT in million) 5,722.50 11,109.00 27,888 13,712 11,373
Market value addition per share (BDT) 212.62 346.13 427.53 98.29 44.49
Shareholders equity (BDT in millon) 1,611.31 2,393.09 3,690.19 3,980.47 4,693
IDLCS share price as on December 31
2010 2011 2012
Highest (BDT) 4,679 140.10 93.90
Lowest (BDT) 4,562 137.30 89.00
Closing (BDT) 4,648 138.50 91.90
Shares traded (No.) 17,700 79,200 27,160
Market Turnover (BDT in million) 81,830 11,037 2,495
Economic and Financial indicators
December 2008 2009 2010 2011 2012
Economic Growth
GDP at Current Market Prices (BDT in Billion) 3,578 4,411 4,825 7,875 9,147.84
GDP Growth Rate (%) 6.80 6.00 3.50 6.66 6.32
Rate of Infation (Consumer Price Index)
General 9.94 6.66 7.31 10.63 7.69
Food 12.28 7.19 8.53 10.4 7.33
Share Market
All Share Price Index - DSE 2,309.35 3,747.53 6,877.66 4,383.94 3,577.21
Market Capitalization (BDT in million) 1,059,530 1,903,228 3,508,006 2,616,730 2,385,247
STAKEHOLDERS CORNER
Annual Report 2012
INFORMATION FOR THE STAKEHOLDERS
237
Glossary
Terms
Terms Meaning
Accrual Basis Recognizing the efects of transactions and events when they occur, without
waiting for receipt or payment of cash or cash equivalent.
Amortisation Amortization is the systematic allocation of the depreciable amount of an
intangible asset over its useful life.
Cash Basis Recognizing the efects of transactions and events when receipt or payment of
cash or cash equivalent occurs.
Cash Equivalents Short-term highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignifcant risk in change in
value.
Consolidated Financial
Statements
Financial Statements of a Group presented as those of a single Company.
Depreciation Depreciation is the allocation of the depreciable amount of an asset over its
estimated useful life. Depreciation for the accounting period is charged to net
proft or loss for the period either directly or indirectly.
Executions Advances granted to clients under leasing, hire purchase, installment sales and
loan facilities.
Fair Value Fair value is the amount for which an asset could be exchanged or a liability
settled between knowledgeable, willing parties in an arms length transaction.
Finance Lease A lease that transfers substantially all the risk and rewards incident to ownership
of the asset to the lessee. Title may or may not eventually be transferred.
Gross Dividend The proportion of proft distributed to shareholders inclusive of tax withheld.
Gross Portfolio Total rental receivable of the advances granted to clients under leasing, hire
purchase, installment sales and loan facilities.
Intangible Asset An intangible asset is an identifable non-monetary asset without physical
substance held for use in the production or supply of goods or services, for rental
to others, or for administrative purposes.
Interest Cost The sum of monies accrued and payable to the sources of borrowed working
capital.
Interest in Suspense Interest income of non-performing portfolio; these interests are accrued but not
considered as part of income.
STAKEHOLDERS CORNER
Annual Report 2012
GLOSSARY
238 GLOSSARY
Terms Meaning
Investment Property Investment property is property (land or a building - or part of a building - or
both) held (by the owner or by the lessee under a fnance lease) to earn rentals or
for capital appreciation or both, rather than for use in the production or supply
of goods or services or for administrative purposes; or sale in the ordinary course
of business.
Lease A lease is an agreement whereby the lessor conveys to the lessee in return for a
payment or series of payments the right to use an asset for an agreed period of
time.
Non-controlling interest
(Minority Interest)
Part of the net results of operations and of net assets of a subsidiary attributable
to interests who are not owned, directly or indirectly through subsidiaries, by
the parent.
Net Portfolio Total rental receivable excluding interest of the advances granted to clients
under leasing, hire purchase, installment sales and loan facilities.
Non-Performing Portfolio Facilities granted to clients which are in default for more than the period
recommended by Bangladesh Bank.
Paid up Capital All amounts received by the Company or due and payable to the Company (a) in
respect of the issue of shares (b) in respect of calls on shares.
Provision Amounts set aside against possible losses on net receivable of facilities granted
to clients, as a result of them becoming partly or wholly uncollectible.
Related Parties Parties are considered to be related if one party has the ability to control the
other party or exercise signifcant infuence over the other party in making
fnancial or operating decisions.
Related Party Transactions A transfer of resources or obligations between related parties, regardless of
whether a price is charged.
Segmental Analysis Analysis of information by segments of an enterprise, specifcally the diferent
industries and the diferent geographical areas in which it operates.
Shareholders Funds (Equity) Total of issued and fully paid ordinary share capital and reserves.
Subsidiary Company Subsidiary is a company that is controlled (power to govern the fnancial and
operating policies of an enterprise so as to obtain benefts from its activities) by
another Company known as the parent.
Value Addition Value of wealth created by providing leasing and other related services
considering the cost of providing such services.
STAKEHOLDERS CORNER
Annual Report 2012
239 GLOSSARY
Ratios
Ratio Method of computation Indication
Cost to Income Ratio Operating expenses excluding provision
for bad and doubtful debts as a
percentage of total operating income,
net of interest cost.
Ef ciency of cost management in
generating income.
Debt to Equity
(Gearing) Ratio
Total debts divided by equity. The extent to which debt contributes
to fund total assets, compared to the
contribution from equity.
Dividend Cover Proft attributable to ordinary
shareholders divided by gross dividends
of ordinary shares.
Number of times dividend is covered
by current years distributable profts.
Dividend Per Share (DPS) Value of the dividend proposed and paid
out to ordinary shareholders divided by
the number of ordinary shares in issue.
Share of current years dividend
distributable to an ordinary share in
issue.
Earnings Per Share (EPS) Proft attributable to ordinary
shareholders divided by the weighted
average number of ordinary shares
outstanding during the year.
Share of current years earnings
attributable to an ordinary share in
issue.
Interest Cover Earnings before interest and tax divided
by interest charges.
Ability to cover or service interest
charges of the debt holders.
Market Capitalization No. of ordinary shares in issue multiplied
by market value of a share.
Total market value of all ordinary
shares in issue.
Net Asset Value per
Ordinary Share
Ordinary shareholders funds divided by
the number of ordinary shares in issue.
Book value of ordinary shares.
Non-Performing
Facilities Ratio
Total gross non-performing portfolio
divided by total gross portfolio.
Percentage of total gross non-
performing portfolio against the total
gross portfolio.
Price Earning Ratio
(PER Ratio)
Market price of a share divided by
Earnings Per Share (EPS).
Number of years that would be taken
to recoup shareholders capital outlay
in the form of earnings.
Return on Assets (ROA) Net profts expressed as a percentage of
average total assets.
Overall efectiveness in generating
profts with available assets; earning
power of invested total capital.
Return on Equity (ROE) Net proft, less preference share
dividends if any, expressed as a
percentage of average ordinary
shareholders funds.
Earning power on shareholders book
value of investment (equity).
STAKEHOLDERS CORNER
Annual Report 2012
240
Annual Report 2012
Section Name....
Eco Friendly
241
STAKEHOLDERS CORNER
Annual Report 2012
IDLCS PRESENCE
CORPORATE HEAD OFFICE
Bays Galleria (1
st
Floor)
57 Gulshan Avenue, Dhaka 1212
Telephone : +880 (2) 883 4990 (Auto Hunting)
Facsimile : +880 (2) 883 4377
E-mail : mailbox@idlc.com
DILKUSHA BRNCH
Eunoos Trade Centre, Level 13
52-53 Dilkusha C/A, Dhaka 1000
Facsimile : +880 (2) 956 3620
E-mail : idlcdlk@idlc.com
GULSHAN BRANCH
Taj Marriot (1
st
Floor)
Facsimile : +880 (2) 883 4148
E-mail : idlcgln@idlc.com
DHANMONDI BRANCH
House No. 39A (3
rd
Floor)
Road No. 14A, Dhanmondi, Dhaka 1209
Telephone : +880 (2) 815 7632
Facsimile : +880 (2) 811 2146
E-mail : idlcdhn@idlc.com
UTTARA BRANCH
Monsur Complex (3
rd
Floor)
Plot No. 59/A, Road No. 7, Sector No. 4
Uttara Model Town, Dhaka 1230
Telephone : +880 (2) 893 2340, 891 9036
Facsimile : +880 (2) 895 9190
E-mail : idlcuttara@idlc.com
MIRPUR BRANCH
Khan Plaza (1
st
Floor)
Plot No. 6, Main Road No. 1
Mirpur 10, Dhaka 1216
Telephone : +880 (2) 805 1845
+880 (2) 805 2492
E-mail : IDLCMirpur@idlc.com
NARAYANGANJ BRANCH
Sattar Tower (Ground Floor)
50 S. M. Maleh Road, Tanbazar
Narayangonj 1400
Telephone : +880 (2) 764 8213-4
Facsimile : +880 (2) 764 8217
E-mail : idlcngonj@idlc.com
NARSHINGDI BRANCH
T Hussain Tower (1
st
Floor), Holding No. 382
Kalibari Road, Narshingdi Bazar, Narshingdi
Telephone : +880 (2) 945 2075-6
Facsimile : + 880 (2) 945 2078
E-mail : IDLCNrsd@idlc.com
SAVAR BRANCH
Alam Plaza (2
nd
Floor)
122/B Jaleshwar, Savar, Dhaka 1340
Telephone : +880 (2) 774 4961-3
Facsimile : +880 (2) 7744962
E-mail : idlcsavar@idlc.com
KERANIGONJ BRANCH
A K Tower (1
st
Floor)
Nagar Mahal Road, Nadidhara Ispahani
East Aganagar, South Keranigonj, Dhaka 1310
Telephone : +880 (2) 776 3805-6
E-mail : idlckeranigonj@idlc.com
TONGI BRANCH
Banesa Complex (Ground Floor)
26, Anarkoli Road, Tongi, Gazipur 1710
Telephone : +880 981 7647, +880 981 7648
Facsimile : +880 (2) 981 7649
E-mail : IDLCTongi@idlc.com
CHITTAGONG BRANCH
Jahan Building 4 (Ground Floor)
76/77 Agrabad C/A, Chittagong 4100
Telephone : +880 (31) 711 034,
713 742, 251 0117-8
Facsimile : +880 (31) 715 895
E-mail : idlcctg@idlc.com
IDLCs Presence
242
STAKEHOLDERS CORNER
Annual Report 2012
IDLCS PRESENCE
NANDANKANON BRANCH
A. K. Mansion (1
st
Floor)
17 J.C. Guha Road
Nandankanon, Chittagong 4100
Telephone : +880 (31) 612 732, 612 715
Facsimile : +880 (31) 612 2762
SYLHET BRANCH
Casablanca (2
nd
Floor)
982 Dargah Gate, Sylhet 3100
Telephone : +880 (821) 728241-3
Facsimile : +880 (821) 728244
E-mail : idlcsyl@idlc.com
COMILLA BRANCH
Artisan Nasir Center (3
rd
Floor)
437 Nazrul Avenue, Kandirpar
Comilla 3500
Telephone : +880 (81) 64 907-8, 72881
Facsimile : +880 (81) 649078 (Ext-110)
: +880 (81) 72881 (Ext-110)
E-mail : idlccomilla@idlc.com
BOGRA BRANCH
Sairul Complex (2
nd
Floor)
Sherpur Road, Sutrapur, Bogra 5800
Telephone : +880 (51) 699 17, 698 38
Facsimile : +880 (51) 698 39
E-mail : idlcbog@idlc.com
JESSORE BRANCH
Rashid Center (2
nd
Floor)
7/A, R. N. Road, Jessore 7400
Telephone : +880 (421) 60892, 60893
+880 (421) 60894, 60895
Facsimile : +880 (421) 60896
E-mail : IDLCJessore@idlc.com
IMAMGANJ SME BOOTH
75 Midfort Road (2
nd
Floor)
Imamganj, Dhaka 1100
Telephone : +880 (2) 734 3766-7
E-mail : IDLCImg@idlc.com
GAZIPUR SME BOOTH
Rahmat Tower (2
nd
Floor)
Holding No. 1034, Outpara, Joydebpur, Gazipur 1700
Telephone : +880 (2) 926 3503, 926 3505
Facsimile : +880 (2) 926 3569
E-mail : IDLCGaz@idlc.com
243
(A wholly owned subsidiary of IDLC)
HEAD OFFICE
36 Dilkusha Commercial Area (13t
h
Floor)
Dhaka 1000, Bangladesh
Facsimile : +880 (2) 716 1544
E-mail : securities@idlc.com
(A wholly owned subsidiary of IDLC)
HEAD OFFICE
Eunoos Trade Centre, Level 21
52-53 Dilkusha C/A, Dhaka 1000
Facsimile : +880 (2) 957 1171
E-mail : merchantbanking@idlc.com
BRANCHES OF
IDLC SECURITIES LIMITED AND IDLC INVESTMENTS LIMITED
GULSHAN BRANCH
Capita South Avenue Tower (5
th
Floor)
Unit No. 502, House No. 50, Road No. 3
Telephone : +880 (2) 988 3898, 988 9861
Facsimile : +880 (2) 989 6142
E-mail : idlcslgulshan@idlc.com
UTTARA BRANCH
Monsur Complex (4
th
Floor)
Plot No. 59/A, Road No. 7, Sector No. 4
Uttara Model Town, Dhaka 1230
Telephone : +880 (2) 895 9392, 895 9046
Facsimile : +880 (2) 896 0982
E-mail : idlcsluttara@idlc.com
DOHS MOHAKHALI BRANCH
House No. 109, Park Road
Block A, New DOHS, Mohakhali, Dhaka 1206
Telephone : +880 (2) 871 5081, 871 5287
Facsimile : +880 (2) 871 4510
E-mail : idlcsldohs@idlc.com
GAZIPUR BRANCH
Rahmat Tower (2
nd
Floor)
Holding No. 1034, Outpara, Joydebpur, Gazipur 1700
Telephone : +880 (2) 926 3503, 926 3505
Facsimile : +880 (2) 926 3539
E-mail: idlcslgazipur@idlc.com
CHITTAGONG BRANCH
Ayub Trade Centre (6
th
Floor)
1269/B Sk. Mujib Road
Agrabad Commercial Area,
Chittagong 4100
Telephone : +880 (031) 251 4051-52
Facsimile : +880 (031) 251 4059
E-mail : idlcslctg@idlc.com
NARAYANGANJ BRANCH
Sattar Tower (Ground Floor)
50 S. M. Maleh Road, Tanbazar, Narayangonj 1400
Telephone : +880 (2) 763 2891, 763 2894
Facsimile : +880 (2) 763 2896
E-mail : idlcslng@idlc.com
SYLHET BRANCH
Casablanca (2
nd
Floor)
982 Dargah Gate, Sylhet 3100
Telephone : +880 (821) 728241-3
Facsimile : +880 (821) 728244
E-mail : idlcslsylhet@idlc.com
KHATUNGANJ BRANCH
M H No. 3/A (4
th
Floor)
Ramjoy Mohajan Lane
Khatunganj, P. S.: Kotwali, Chittagong 4100
Telephone : +880 (031) 286 6491-3
Facsimile : +880 (031) 286 6494
E-mail : idlcslkg@idlc.com

STAKEHOLDERS CORNER
Annual Report 2012
IDLCS PRESENCE
244
STAKEHOLDERS CORNER
Annual Report 2012
IDLCS PRESENCE
245
Shareholders Note
246
Shareholders Note
PROXY FORM
I/We .................................................................................................................................................................................................................................................................................... of
.................................................................................................................................................................................. being a member of IDLC Finance Limited
and a holder of .............................................................................................. shares hereby appoint Mr./ Ms. ...................................................................
......................................... of .................................................................................... as my/ our proxy to vote for me/us and on my/our behalf
at the 28
th
Annual General Meeting of the Company to be held on March 25, 2013 (Monday) and at any
adjournment thereof.
Signed this day of March 2013
Signature
Revenue
Stamp of
BDT 20
Signature
Name : Name :
(Proxy) (Member)
Folio/BO ID No. Folio/BO ID No
NOTE :
a) This form of proxy, duly completed, must be deposited at least 48 hours before the meeting at the Companys
registered of ce. Proxy is invalid if not signed and stamped as explained above.
b) Signature of the shareholders should agree with the specimen signature registered with the Company and
Depository Register.
ATTENDANCE SLIP
I hereby record my attendance at the 28
th
Annual General Meeting of IDLC Finance Limited as a holder of
..................................................................................................................................................................................................... shares of the Company.

Signature
Name :
(Member/ Proxy)
Folio/BO ID No.
NOTE :
Shareholders attending the meeting in person or by proxy are requested to complete the Attendance Slip
and hand it over at the entrance of the meeting hall.
Bays Galleria (1st Floor)
57 Gulshan Avenue, Gulshan-1 Dhaka-1212
Tel: +88 02 8834990, Fax : 8834377
Bays Galleria (1st Floor)
57 Gulshan Avenue, Gulshan-1 Dhaka-1212
Tel: +88 02 8834990, Fax : 8834377
248

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IDLC FINANCE LIMITED

1.2(ii)(c) Who does not have any other

1.2(ii)(d) Who is not a member, director or of cer

1.2(ii)(e) Who is not a shareholder, director

1.2(ii)(f ) Who is not a partner or an executive

1.2(ii)(h) Who has not been convicted by a court

1.2(ii)(i) Who has not been convicted for a criminal

1.2(iii) Independent Director(s) shall be

No such vacancy created

1.3 Qualifcation of Independent Director (ID)

1.3(ii) The person should be a Business

1.3(iii) In special cases the above qualifcations

1.5(xxi)(b) Directors, Chief Executive Of cer,

1.5(xxii) In case of the appointment/re-

3.0 AUDIT COMMITTEE:

3.1(iii) All members of the audit committee

3.3(iii) Monitor Internal Control Risk

3.3(iv) Oversee hiring and performance of

3.3(vi) Review along with the management,

3.3(vii) Review the adequacy of internal audit

3.3(viii) Review statement of signifcant related

3.3(ix) Review Management Letters/ Letter of

3.3(x) Declaration to Audit Committee by the

4.0(ii) Financial information systems design

4.0(iii) Book-keeping or other services related

4.0(iv) Broker-dealer services.

4.0(viii) No partner or employees of the external

5.0 SUBSIDIARY COMPANY:

5.0(iv) The minutes of the respective Board

5.0(v) The Audit Committee of the holding

6.0(i)(b) These statements together present a

6.0(ii) There are, to the best of knowledge and

7.0 REPORTING AND COMPLIANCE OF CORPORATE GOVERNANCE:

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