IFC and Citi to Support Expansion of BRACís Microlending in Bangladesh
IFC, a member of the World Bank Group, and Citi, the leading global financial services institution will support BRACís microlending in Bangladesh with a local currency facility to benefit BRACís microcredit and small and medium enterprise customers.
The $22 million term facility will be made available in local currency (Bangladeshi taka), with a five-year tenor and an amortizing structure. BRAC, one of the largest microfinance institutions in the world, continues to invest in portfolio expansion. In supporting BRACís move to manage its balance sheet, diversify its sources of funding, and access longer-tenor financing, this innovatively structured transaction will benefit BRACís microcredit and small and medium enterprise customers.
The loan is part of a wider Citi-led financing for BRAC that was mandated last year. Of the $55 million equivalent in term financing, Citi is providing $42 million. The $22 million IFC-Citi tranche, which closed recently, includes an $18 million partial credit guarantee from IFC. This risk-sharing partnership with IFC will enable Citibank in Bangladesh to extend additional long-term local currency funds to BRAC.
Fazle Hasan Abed, Chairperson of BRAC, present at the signing with IFC and Citi, said, ďTo finance the growth of our microfinance operations, we need local currency financing. Support from IFC and Citibank, as well as our partnership over the years, has been invaluable.Ē
ďWith this guarantee, BRAC will be able to reduce its dependence on grants for growth and expand its outreach to people, particularly women borrowers,Ē said Lars Thunell, IFC Executive Vice President and CEO.
ďCiti is honored to support BRAC again in their microlending expansion plans in Bangladesh. Citi has a track record of several groundbreaking deals for BRAC, and IFC is also an important partner of Citi in various markets globally. We look forward to working with BRAC in the future. I would like to thank all our partners who helped make this such a successful transaction,Ē said Mamun Rashid, Managing Director & Citi Country Officer Ė Bangladesh.
Citi and BRAC have a long relationship that included issuing the worldís first triple A-rated local currency securitization of microcredit receivables in 2006. This was followed by innovative remittance distribution arrangement and the first-ever backstopped facility for a microfinance institution in 2007.
This is IFCís first investment in BRAC, but the two institutions have a long-standing relationship, having jointly pioneered projects in housing finance and SME lending in Bangladesh.
BRACís microfinance and development programs cover all 64 districts in Bangladesh. It also offers microloans to women through its group-lending methodology. Nearly 1,200 nongovernmental organizations provide microcredit services in more than 40,000 Bangladeshi villages, where half the population lives below the poverty line. The countryís microfinance sector has been financed typically through contributions from donors and subsidized government funds, particularly for smaller microfinance institutions. As this funding diminishes, the sector increasingly borrows from commercial banks and taps into voluntary savings by members.
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.