Dhaka, Bangladesh, July 19, 2011—
IFC, a member of the World Bank Group, has launched an $80 million short-term liquidity facility to provide banks in Bangladesh with working capital and trade financing solutions following recent market disruptions in foreign exchange availability in the country. The funds were made available through the newly formed IFC Bangladesh Small and Medium Enterprise Liquidity Facility, a rapid-response initiative to help meet funding needs of local banks and small businesses.
Bangladeshi regulatory authorities have been particularly complimentary of the speed and timeliness of IFC’s intervention and financing support. The facility will enable small and medium enterprises, especially those that are export-oriented, to have continued access to critical funding for timely issuance and discounting of Letters of Credit.
In the first phase, IFC signed agreements with existing clients Eastern Bank Limited, BRAC Bank, and Southeast Bank Limited. The facility is well received by local bankers and subsequently will reach out to other banks that could potentially receive similar financing.
Appreciating IFC’s swift response, the three banks’ CEOs expressed their endorsement of IFC’s ability to put together “an innovative mechanism to address the liquidity needs of their borrowers.” All three felt IFC filled a critical market need in Bangladesh, where trade finance is either prohibitively costly or not available given the country’s perceived risks.
“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,” said Kyle F. Kelhofer, IFC Country Manager for Bangladesh.
The facility will help increase the number and value of short-term transactions to finance the working capital needs of small enterprises and exporters located in Bangladesh’s Special Economic Zones. IFC’s funding will encourage international banks to follow IFC’s lead and finance the local banking sector and increase their range of funding options. It will also help accelerate export-led economic growth in Bangladesh in addition to supporting job security in the small business sector.
IFC has been working in Bangladesh, with both investment and advisory services, to strengthen underserved economic sectors and ease constraints to access to finance, especially for small businesses.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit
www.ifc.org
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