MICROCAPITAL BRIEF: International Finance Corporation (IFC) Funds $80m Liquidity Facility to Bangladeshi Local Banks to Meet Small and Medium-Sized Enterprise (SME) Funding Needs

The International Finance Corporation (IFC), the private investment arm of the World Bank Group, recently announced it has provided a USD 80 million short-term liquidity facility to local commercial banks in Bangladesh to meet the working capital and trade financing needs following recent market disruptions that have reportedly decreased the availability of foreign exchange in the country. The facility is expected to support small and medium-sized enterprises (SMEs) – particularly those located in the Special Economic Zones that are intended to stimulate local as well as foreign investment – in their export operations with continued funding for timely issuance and discounting of letters of credit.

The funds are being disbursed through the newly-formed “IFC Bangladesh Small and Medium Enterprise Liquidity Facility,” an ad-hoc initiative designed to help funding needs of local banks and small businesses. IFC has initiated the first phase of the transaction by signing loan agreements with existing local commercial banks, namely Eastern Bank Limited, BRAC Bank and Southeast Bank Limited.

Kyle F. Kelhofer, IFC country manager for Bangladesh, said, “The facility aligns with IFC’s financial sector strategy in Bangladesh, by seeking to strengthen local financial institutions with capital, liquidity support and advisory services. Through the facility, IFC will support the private sector, especially export-oriented companies and small entrepreneurs, who form the backbone of the country’s economy.”

By Carol Kim, Research Associate

About International Finance Corporation (IFC): IFC is a member of the World Bank Group that offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2011, IFC has 182 member countries that drive its policies and approve disbursements. As of June 30, 2010, IFC reports net income of USD 1.75 billion, total assets of USD 61 billion, return on assets of 3.1 percent and total investment mobilization of USD 18.4 billion to 528 projects.

Sources and Additional Resources:

International Finance Corporation (IFC) Press Release: “IFC Launches Liquidity Facility in Bangladesh to Meet Critical Funding Needs of Smaller Businesses”, July 2011, http://www.ifc.org/IFCExt/pressroom/IFCPressRoom.nsf/0/39D093A7D66433CA852578D200277C8C?OpenDocument

MicroCapital.org: “MICROCAPITAL BRIEF: International Finance Corporation (IFC), Microsave Publish Deposit Assessment Reports for Bangladesh, India, Nepal and Sri Lanka”, July 9, 2011, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-microsave-publish-deposit-assessment-reports-for-bangladesh-india-nepal-and-sri-lanka/

MicroCapital.org: “MICROCAPITAL BRIEF: International Finance Corporation (IFC) Extends $5m Trade Facility to Laxmi Bank of Nepal to Support Small Businesses”, March 30, 2011, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-extends-5m-trade-facility-to-laxmi-bank-of-nepal-to-support-small-businesses/

MicroCapital’s Universe Profile: International Finance Corporation (IFC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

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