When the entire financial industry has been struggling with high default loans, Alliance Finance, a joint venture financial institution with Sri Lankan investment in Bangladesh, managed to keep its default rate within 1% thanks to proper risk management.
In its first four years, Alliance Finance did not have even any default loans, said Kanti Kumar Saha, chief executive officer (CEO) of the company, when delivering his speech at an event marking its 8th anniversary held at city hotel today (28 March).
People’s Leasing and Finance, a subsidiary of Sri Lanka’s largest state-owned bank, People’s Bank has major stake at Alliance Finance.
The local sponsors include large corporates and individuals such as Summit Group, Rangs Group, Alliance Holdings Limited, Green Delta Insurance Company Limited and Concept Knitting.
The size of loan book of the company was over Tk468 crore as of December 2024 when total deposit was over Tk432 crore, according to its annual report.
When most of non-bank financial institutions have been struggling to survive with huge losses, net asset value per share of Alliance Finance was Tk11.54 at the end of 2024.
Giving credit to the management team, Jowher Rizvi, chairman of Alliance Finance said it is a great success of keeping default loans at 1% level despite various difficulties.
“However, the secret behind it is no intervention from the board. If you want to successfully run your company don’t let your board to intervene which we strictly follow,” he said.
“As a chairman, I do not have even office room at the company as we board members only attend the meetings,” he added.
Kanti Kumar said, “Our strengths are mainly three – board comprising highly educated and successful business people who have been guiding the institution successfully at the level today. Secondly, our liquidity management and commitment to the depositors to return their money on time. Alliance Finance never failed its commitment to its valued depositors as well as its lenders. Thirdly, our human resources who are well trained and experienced enough to navigate through turbulent water.”
He further said, “despite the industry is going through difficult time having very high level of NPL, but we are very fortunate that we did not have any NPI, till first 4 years of operations, although later on we experienced it but managed to keep it within 1% for last four years.”
“Though the demand for loan had gone down for various reasons, Alliance Finance (AFPLC) managed to maintain its growth trajectory over the years without any surprises. Same is profitability trend and continuity of dividend payment to the shareholders,” he said.
“Alliance Finance managed to keep its Long-Term Credit Rating at AA- and Short-Term Credit Rating at ST-2 for last two consecutive years despite volatility in the financial sector when ratings have been downgraded for many companies.”
He firmly believes that it will be improved further in the coming days.
Sharing business strategy, he said, “The Alliance Finance has entered into various strategic alliances with leading MFIs [Micro Finance Institutions] to reach out women and CMSME clients to extend agri and sustainable finance in the rural area. It has entered in agreement with various department of the central bank also for refinancing and pre-financing schemes and as a result more than 20% funding source of AFPLC is refinancing which has kept our cost of fund low.”
He projects that future of financial sector will be fintech-driven.
“We launched our Core Business Solutions (CBS) two and half years back to provide seamless services to our valued customers and to protect data integrity. We are among the top five finance companies to rollout eKYC and lately all digital platform to facilitate real time transactions.”
“We have already created the platform for collecting and paying to the clients through Mobile Financial Service operators for which deposit clients can pay its instalments while borrowers can pay EMI through their mobile phone quickly,” he added.
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