IFIC Bank Eyes Sustainable Growth After Recovering Tk 8,500cr in Bad Loans

After recovering Tk 8,500 crore in defaulted loans over the past 19 months, IFIC Bank is positioning itself for a new phase of sustainable growth, betting on stronger governance, disciplined lending, technology-driven banking and a cash-flow-based credit policy as Bangladesh's banking sector undergoes a sweeping transformation.

In an exclusive interview with The Daily Observer, Syed Mansur Mustafa, Managing Director and CEO of IFIC Bank PLC, said the country's first-generation private commercial bank is deliberately pursuing qualitative and sustainable growth rather than aggressive short-term expansion as it seeks to strengthen its financial foundation and restore long-term resilience.

Speaking at IFIC Bank's headquarters in Purana Paltan, Mustafa expressed optimism that Bangladesh's banking industry is entering a new era under the new government's reform agenda, with greater emphasis on accountability, governance and rebuilding public confidence.

"The banking sector is undergoing significant transformation and restructuring to restore public confidence, strengthen financial foundations and reinforce governance and accountability," he said.

His optimism comes at a time when Bangladesh's banking system is grappling with its worst-ever default loan crisis. 

Several initiatives are currently underway to accelerate recoveries further. Default loan recovery is not a one-off exercise; it is a continuous process requiring firmness, professionalism and pragmatic solutions. 

Bangladesh Bank data show that 15 of the country's 61 scheduled banks account for nearly 85 per cent of all defaulted loans. Their combined non-performing loans (NPLs) stood at more than Tk 4.99 lakh crore out of the banking sector's total classified loans of around Tk 5.88 lakh crore as of March this year, exposing years of widespread loan irregularities, fraud and politically connected financial scams concentrated in a handful of commercial banks.

Against this backdrop, IFIC Bank has made recovery of bad loans its highest operational priority. Mustafa said the bank recovered around Tk 7,000 crore from defaulted loans during 2025 and another Tk 1,500 crore in the first seven months of 2026 through an aggressive and closely monitored recovery campaign.

"Several initiatives are currently underway to accelerate recoveries further. Default loan recovery is not a one-off exercise; it is a continuous process requiring firmness, professionalism and pragmatic solutions," he said.

“The bank has adopted borrower-specific recovery strategies for major defaulting clients, placing particular emphasis on direct cash recovery. It is simultaneously using all legitimate legal avenues, Alternative Dispute Resolution (ADR) mechanisms and structured rescheduling policies where commercially appropriate. 

And the most important is that some dedicated action plans have been prepared for large defaulted accounts, with clear timelines and responsibilities assigned to senior officials”.

Mustafa said the objective is not merely to reduce the headline NPL figure but to improve cash flow, strengthen asset quality, reinforce capital adequacy and restore the bank's sustainable earning capacity.

"Under the prevailing macroeconomic conditions, banks should not focus solely on expanding business volume.
Building a strong, resilient and sustainable balance sheet must be the foremost priority," he added.

A major shift in IFIC Bank's strategy is its growing reliance on cash-flow-based lending instead of conventional collateral-driven credit decisions. Mustafa said the bank follows a strict and responsible credit policy designed to prevent fresh loans from becoming non-performing assets.

Before approving any loan, IFIC conducts rigorous due diligence through comprehensive verification, financial analysis, repayment capacity assessment and sector-specific risk evaluation. After disbursement, borrowers' business operations, cash flows and repayment behaviour remain under continuous monitoring through strengthened early-warning systems and post-disbursement surveillance.

"Our principle is clear: regardless of the volume of demand, no credit is approved without proper due diligence. Today's cautious lending is tomorrow's protection against default loans," he said.

He added that IFIC now relies heavily on market intelligence and its internal data systems when evaluating loan applications, ensuring that lending decisions are driven by business viability rather than excessive risk-taking.

Mustafa acknowledged that Bangladesh's persistent power and gas shortages have created significant pressure on industries, particularly export-oriented manufacturing units, disrupting production, increasing operating costs and weakening business cash flows.

However, he stressed that IFIC Bank does not automatically classify borrowers as high-risk or defaulted simply because they are facing temporary disruptions caused by the energy crisis.

Instead, the bank conducts individual risk assessments to identify vulnerable clients early and regularly reviews their business prospects, cash flows and repayment capabilities.

"Where businesses have strong fundamentals but face temporary operational difficulties, we consider providing appropriate support within Bangladesh Bank guidelines," he said.

IFIC Bank continues to prioritise financing productive sectors that contribute to employment generation and economic growth, including power and energy, readymade garments and textiles, pharmaceuticals, agriculture, SMEs, cement, steel, infrastructure and food processing.

According to Mustafa, financing decisions for large projects are based on comprehensive assessments of economic viability, sponsors' credibility, repayment ability, collateral sufficiency and sector-specific risks rather than the size of the investment alone.

Alongside strengthening credit discipline, IFIC Bank is investing heavily in governance reforms, internal control systems and regulatory compliance as part of its broader transformation strategy.

The bank is also expanding technology-driven, customer-centric banking services while continuously upgrading the skills and leadership capabilities of its workforce. Mobilising low-cost deposits has become another strategic priority aimed at reducing funding costs, strengthening liquidity and improving operational efficiency.

Established in 1976 as a joint-venture finance company before becoming a full-fledged commercial bank in 1983, IFIC Bank remains one of Bangladesh's oldest private commercial banks. The Government of Bangladesh holds a 32.75 per cent stake, while the remaining shares are owned by local and foreign institutions as well as general shareholders. The bank now operates an extensive nationwide network of more than 1,400 branches and sub-branches.

Mustafa said the bank's large customer base, expanding digital infrastructure and experienced workforce provide a strong platform for its future growth.

"Our objective is to become one of the leading private commercial banks in Bangladesh in terms of trust, efficiency, governance, financial strength and customer service quality. The ultimate goal is to build an institution that customers, businesses and the national economy can rely on over the long term," he said.

IFIC Bank has also posted impressive growth in inward remittances and digital banking operations this year. During the first six months of 2026, inward remittance inflows reached USD 72.8 million, compared with USD 35 million during the same period last year, representing a 130.4 per cent year-on-year increase.

The number of remittance transactions also surged from 25,352 to 55,084, marking a 117.3 per cent increase over the corresponding period.

The bank's Bangla QR platform has expanded rapidly as digital payments gain momentum. The number of active Bangla QR merchants increased from 6,640 in December 2025 to more than 11,500 by June 2026, while daily Bangla QR transaction volume jumped from around Tk 55 lakh to nearly Tk 3 crore within six months.

IFIC Bank's mobile banking application has also continued its steady growth trajectory, with daily transaction value rising from Tk 247 crore to Tk 273 crore during the same period.

Mustafa said these achievements reflect the bank's broader strategy of combining stronger governance, disciplined lending, aggressive recovery of bad loans, low-cost deposit mobilisation and sustained investment in technology and human capital.

As Bangladesh's banking industry struggles with record default loans, capital shortages and weakened public confidence, IFIC Bank is seeking to position itself as a model for sustainable banking�"one built not on rapid credit expansion, but on prudent lending, stronger governance, financial discipline and long-term trust.