Brac Bank to get $30m IFC loan
International Finance Corporation (IFC), a member of World Bank Group, is set to provide Brac Bank a $30 million loan to come to the aid of small and medium enterprises (SMEs) and larger companies hit hard by the impacts of the Covid-19.
The investment will help to keep businesses open and preserve jobs, which is critical to sustaining the Bangladeshi economy, said the IFC, which is the largest global development institution focused on the private sector in emerging markets, in a statement.
With the financing, Brac Bank is expected to extend loans to its SME and corporate customers, supporting businesses that were now coping with a new wave of Covid-19 in Bangladesh.
"Brac Bank promotes businesses of all sizes but as the pioneer of SME banking, we are particularly conscious of the needs of SMEs and micro-enterprises that play a vital role in driving economic growth and employment-generation," said Selim RF Hussain, managing director and CEO of Brac Bank.
"The Covid scenario is challenging and at the same time difficult for both banks and their SME and corporate customers. We hope that the partnership with the IFC would help us continue supporting the Covid-impacted businesses and help them recover," he said.
The financing package is part of the IFC's $8 billion global Covid-19 fast-track financing facility to support companies during the ongoing public health crisis.
This new investment comes under the Working Capital Solutions (WCS) programme of the Covid-19 response envelope, which is providing $2 billion globally to emerging-market banks, enabling them to support struggling firms.
This project will also be supported by the International Development Association's Private Sector Window Blended Finance Facility, which is also supporting the IFC's WCS programme with a first-loss guarantee of up to $215 million in eligible countries.
The SMEs make up over 90 per cent of businesses in Bangladesh and employ over 20 per cent of the adult population, the statement said.
Their cash flows have heavily been disrupted by the ongoing Covid-19 pandemic. An IFC survey last October showed nearly a third of workers in Bangladesh's micro, small and medium sized enterprises were jobless at the time, due to the Covid-19 impacts.
"Clearly, the impacts of Covid-19 are continuing to exact a heavy toll on businesses trying to keep operating and keep staff employed," said Wendy Werner, IFC country manager for Bangladesh, Bhutan and Nepal.
"This finance line to our long-standing partner, Brac Bank, is the most recent part of IFC's effort to help Bangladesh build back better from the Covid-19 pandemic," said Werner.
In Bangladesh, the IFC has provided a total of $260 million in working capital solutions to banks and liquidity support to companies since the beginning of the Covid-19 crisis, including this new funding to Brac Bank.