The Asian Development Bank's Board of Directors has raised the limit of an existing microfinance risk participation and guarantee programme by an additional $100 million in assistance for its Microfinance Institutions (MFIs). The programme has been successful, supporting growth and employment opportunities for over three million borrowers across Asia and the Pacific to date.
"Giving small businesses and entrepreneurs' access to finance is one proven tool to improve livelihoods and reduce poverty," said Sabine Spohn, Senior Investment Specialist in the ADB's Private Sector Operations Department. "The ADB will continue to expand its support for those at the bottom of the pyramid by increasing the size and scope of the microfinance programme."
The microfinance programme is implemented through a risk participation and guarantee structure. Under the programme, the ADB selects partner financial institutions that provide local currency loans to ADB-approved MFIs. The ADB risk participates or partially guarantees the default risk of these MFIs, thereby catalyzing private sector participation and mobilizing additional funds for them.
Since 2010, the ADB's microfinance programme has supported $622 million in new loans, and an additional $327 million in co-financing. The programme has worked with 27 MFIs and operates in India, Bangladesh, and Indonesia. Among the 3.49 million borrowers served by the programme, more than 90 percent have been women and predominately in rural areas.
Standard Chartered Bank and Citi as well as IFMR Capital, IndusInd Bank, Kotak Mahindra Bank, and RBL Bank are backers of the programme in the risk participation structure, said a press release. The ADB's additional financing will help the program expand into new markets in the region, such as Myanmar, Pakistan, and Sri Lanka.-PR
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