LankaBangla gets $20m from ICD

The Islamic Corporation for the Development of the Private Sector (ICD) is providing $20 million to LankaBangla Finance Ltd to foster private sector development in Bangladesh, especially in the small and medium enterprise sector.

The two sides signed a deal at the Pan Pacific Sonargaon hotel in Dhaka yesterday. Ayman Amin Sejiny, chief executive officer of the ICD, a member of the Islamic Development Bank, and Khwaja Shahriar, managing director and CEO of LankaBangla Finance, inked the deal.

“Bangladesh has a prosperous economic future where SMEs will play a very important role. So, we have planned to ensure financing for SMEs,” said Sejiny.

Shahriar said LankaBangla Finance disburses about 28 percent of its loan to the SME sector and has more than 4,000 SME clients.

“We have a plan to increase loans to SMEs. So, this fund will be very useful for us.”

This was the first time a non-bank financial institution (NBFI) in Bangladesh has received funds from the ICD, a multilateral development financial institution, Shahriar said. “This fund will boost our liquidity and will ensure a lower cost of funds for us,” he added.

The cost of the fund for LankaBangla is about 6 percent. From the fund, it will provide Shariah-based or asset-backed loans.

LankaBangla will have to take approval from the central bank for the loan. The loan will have to be repaid within 40 months and the NBFI may get an additional 20 months depending on its quarterly repayment situation and good relationship.