MICROCAPITAL BRIEF: Asian Development Bank (ADB) Loan to Regional Development Bank of Sri Lanka to Leverage Up to $533m for Rural Microfinance, SME Lending

The Asian Development Bank (ADB), a multilateral institution based in the Philippines, recently loaned USD 50 million to Sri Lanka’s state-owned Regional Development Bank (RDB) for on-lending to micro- and small enterprises outside the city of Colombo. These enterprises are to include 500 led by women. The ADB loan funds also will function as regulatory capital, allowing RDB to leverage an additional USD 533 million for lending to micro-, small and medium-sized enterprises (MSMEs). The capital also will assist RDB in complying with the requirements of Basel III, an international regulatory framework for banks.

In support of the loan, the Japan Fund for Poverty Reduction, which is funded by the government of Japan and implemented by ADB, will donate USD 1 million for technical assistance to enhance RDB’s business model through: (1) a marketing campaign to promote its deposit services; (2) increasing its risk management capacity; and (3) training the 500 women borrowers to be funded by the ADB loan.

Founded in 2010, RDB serves 6 million customers via 268 service points as of 2019. Its goal is to “strengthen the living standards of the rural population by providing affordable and accessible credit facilities” by: (1) focusing on industries such as agriculture, raising livestock and fisheries; (2) empowering women and MSMEs; and (3) encouraging savings among people in rural areas and youth across Sri Lanka.

Established in 1966, ADB’s goal is to eradicate poverty in the Asia-Pacific region. It is owned by 67 countries, of which 48 are located in the region. ADB has a 2019 administrative budget of USD 690 million. During 2017, it disbursed loans totalling USD 10.6 billion.

Sources and Additional Resources

ADB press release: ADB Expanding Access to Credit for Micro and Small Rural Enterprises in Sri Lanka
https://www.adb.org/news/adb-expanding-access-credit-micro-and-small-rural-enterprises-sri-lanka

RDB homepage
https://www.rdb.lk/

ADB homepage
https://www.adb.org

ADB 2019 budget
https://www.adb.org/news/adb-approves-2019-budget

ADB Annual Report 2017
https://www.adb.org/documents/adb-annual-report-2017

MICROCAPITAL BRIEF: Asian Development Bank (ADB) Loans $60m to Zhujiang Financial Leasing for Small, Medium-sized Enterprises (SMEs) in Central, Western China
https://www.microcapital.org/microcapital-brief-asian-development-bank-adb-loans-60m-to-zhujiang-financial-leasing-for-small-medium-sized-enterprises-smes-in-central-western-china/

MICROCAPITAL BRIEF: ADB Lending $20m in Local Currency to MicroCred to Support MSME in Western China https://www.microcapital.org/microcapital-brief-adb-lending-20m-in-local-currency-to-microcred-to-support-msmes-in-western-china/

MICROCAPITAL BRIEF: Hatton National Bank (HNB) Secures Partial Guarantee from Asian Development Bank (ADB) for $20m in Lending to Microfinance Institutions (MFIs) in Sri Lanka
https://www.microcapital.org/microcapital-brief-hatton-national-bank-hnb-secures-partial-guarantee-from-asian-development-bank-adb-for-20m-in-lending-to-microfinance-institutions-mfis-in-sri-lanka/

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