ICFC Finance Limited has been largely successful in maintaining its liquidity while a number of financial institutions continue to face liquidity crunch. Sunil Pant, General Manager of ICFC, claimed the company maintains liquidity of 28 to 30 per cent at any given point of time. “Maintaining liquidity is our key concern at present. We think of profitability only after we have maintained enough liquidity,” he explains. The company has made a net profit of Rs 27.19 million by the end of third quarter of the current fiscal year.

After being registered in 2003, ICFC commenced its operations from July 17, 2004. “We started with a paid-up capital of around Rs 25.5 million before going public,” Pant shared. In its seven years of operation, the company has Rs 330 million as paid-up capital out of core capital of Rs 400 million.

Pant asserts that success did not happen overnight. He says, “We are always focused on our future plans and tread a cautious path while lending.” He added that the finance company is headed by professionals with long exposure and experience in commercial banking. Ram Babu Pant heads the company as the CEO and has served as Deputy Governor of Nepal Rastra Bank (NRB) in the past. The board of directors too comprise of influential members under the chairmanship of Suresh Kumar Agrawal.

 â€œThe economic sector was booming and there were a lot of business opportunities when we began our service,” says Pant. He claims ICFC’s Credit to Deposit ratio is around 70 to 75 per cent. He adds, “We never focused on investment in a single sector since the beginning.”

At present, ICFC has deposits of around Rs 3 billion and loans and advances amounting to Rs 2.45 billion. Therefore, the difference between loans and deposit is around Rs 550 million while cash in reserve is about Rs 1.05 billion. It lends mostly in trading, industry and education sectors and less in hire purchase and margin lending. Pant said the company has refrained from investing in land plotting and real estate though it does grant personal and home loans.

The company has eight branches including the main branch at Bhatbhateni. Pant tells that ICFC opens a new branch only after the previous branch reaches break-even . It has been launching a new branch every year in a phase-wise manner. He opines, “We are a finance company so opening multiple branches at once will be challenging to manage. We do want to upgrade our status. However, we have opted to wait and watch given the current state of the economy.” He thinks the current liquidity crisis is snowballing into a sort of credit crunch. “We must maintain a strong position with respect to liquidity as we are responsible for safeguarding our depositors’ interests,” he asserted.

ICFC has been giving either dividend or bonus shares to its stakeholders every year on an alternate basis. “A cash dividend of 15 per cent was given last year while bonus shares were issued the year before,” Pant states.

The finance company offers its own ATM services at every branch. It is also linked to the SCT network which has around 1,500 ATM counters throughout the country. Pant says that customer satisfaction is the topmost priority at ICFC. “We provide all banking products and facilities offered by a conventional bank,” he claims. The company provides all banking services including mobile banking, SMS banking and Internet banking apart from locker facilities at some of its branches.

Pant distinguishes ICFC from similar institutions through its quality of services provided. “Everyone is doing almost similar things in the market but we are more focused on service delivery along with our bouquet of total banking services,” Pant explains.

The company believes that banking industry largely depends on trust which should not be shaken at any cost. Therefore, the company has made corporate governance its top priority. Pant attributes the failure of some banks and finance companies to weak corporate governance rather than liquidity problem. Pant reassures ICFC was safe in the past and will remain safe in the future too. Its reputation has helped build a customer base of around 50,000 people.

ICFC is increasing its access to micro financing through First Micro Finance Development Bank, of which it is a promoter. Little service differentiation between commercial banks and finance companies has led to competition between them. Pant feels that while competition is good and adds excitement to work, ICFC does not indulge in aggressive competition. He thinks customers are spoilt with choices today and are free to subscribe to better services and facilities offered by just any company.

A total of 85 employees work at ICFC Finance Limited. Pant says, “We give equal priority to all ICFC family members and ensure a sense of belonging and job satisfaction. We give our people a lot of independence and authority to meet these objectives.” He adds that the company’s uncompromising attitude in providing facilities at par with the competitors has helped ensure employee retention to a large extent.

ICFC plans to achieve and sustain unprecedented growth in the future. However, it is eagerly waiting for policies that will come in with the new fiscal year. “We can then decide our future course of action,” Pant concludes.

 

SWOT Analysis

Strengths:

Team of experienced professionals

Strong capital base

Liquidity maintenance

Total banking services

Focus on service delivery

Weaknesses:

Less number of branches

Small capital size

Opportunities:

Huge market potential

Services and branches expansion

Investment  possibilities

Threats:

Liquidity crunch in the market

Political and policy instability

Lack of investment environment

 

Unaudited Financial Results as of mid April 2011

Source: ICFC Finance Limited