IFC proposes $55m investment in Bangladeshi bank

According to a disclosure, the proposed investment includes a short-term loan for up to $20 million from the IFC’s account and a $35 million guarantee from the Global Trade Finance Program, an initiative by the IFC to mitigate risks for banks seeking to finance trade in emerging markets. Dhaka Bank plans to use the capital to help export-oriented small to medium-size enterprises (SMEs) in Bangladesh meet their foreign currency needs.

Dhaka Bank was founded in 1995 and had total assets of $2.5 billion as of September 2016, with 95 branches across nearly all major cities in Bangladesh. It introduced an SME financing initiative in 2013 along with outreach efforts for rural entrepreneurs, sustainable and woman-run businesses.

IFC’s investment is expected to stimulate business growth and export competitiveness among Bangladeshi small businesses, particularlyin the garment sector, by making it easier for them to satisfy their working capital requirements. The development finance institution (DFI) considers the expansion of SMEs, which account for 25% of Bangladesh’s GDP and over 70% of its non-agriculture labor force, to be critical to the country’s economic future.

IFC’s financial services investments in South Asia have tended to focus on non-banking financial companies (NBFCs) such as India’s Janalakshmi and Grameen Koota, in support of its financial inclusion goals. The Dhaka Bank deal more closely resembles its proposed $150 million investment in Thailand’s TMB Bank, which was also justified on the basis of improving access to financial services for the country’s SMEs.

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• Topics
• South Asia
• Financials
• Expansion
• IFC
• Financial Services
• Bangladesh