International Finance Corporation (IFC) is providing BRAC Bank Limited a $50 million loan to aid small and medium-sized enterprises (SMEs) recover from the effects of the COVID-19 pandemic.
This investment is set to contribute to the preservation of jobs and bring foreign exchange liquidity into BRAC Bank to help support the working capital and trade finance requirements of the bank’s SME importer and exporter clients.
This investment, along with a similar loan to Prime Bank in February, will also send a positive signal to the market and contribute towards attracting additional international investors to support the foreign exchange financing needs of local banks and SMEs, IFC said.
The financing package is part of IFC's $8 billion global COVID-19 fast-track financing facility to support companies during the ongoing public health crisis. This new investment comes under the Working Capital Solutions (WCS) program of the COVID-19 response envelope, which is providing $2 billion globally to emerging-market banks, enabling them to support struggling firms.
This project will also be supported by the International Development Association's Private Sector Window Blended Finance Facility, which is also rendering aid to IFC's WCS program.
BRAC Bank is Bangladesh’s third-largest private bank and the only SME-focused bank in the country.
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"Our SME and corporate clients continue to confront challenges arising from the disruptive effects of COVID-19. The insufficient availability of foreign exchange has additionally impeded their regular trading operations," said Selim R. F. Hussain, the Managing Director and CEO of BRAC Bank.
The aftermath of the COVID-19 pandemic has resulted in a global economic slowdown, influenced by a series of factors, including geo-political events.
“IFC has been supporting the banking sector in export-driven economies like Bangladesh, which have been facing declines in foreign exchange reserves due to various macroeconomic and geopolitical headwinds,” said Joon Young Park, IFC’s Portfolio Manager for South Asia.
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"IFC plans to continue providing its steadfast support to key banking partners in Bangladesh who have significant SME portfolios, such as BRAC, with whom IFC has had equity and debt commitments over the past 19 years.”
IFC has invested more than $3.6 billion to promote the growth of the private sector in Bangladesh since 2010, thereby creating job opportunities for the country's citizens. And since the beginning of the COVID-19 crisis, IFC has provided over $360 million in working capital solutions and liquidity support to banks and companies in Bangladesh.
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"After three long years of grappling with the impact of the pandemic, businesses in Bangladesh continue to face challenging market conditions,” said Martin Holtmann, IFC Country Manager for Bangladesh, Bhutan, and Nepal. “By supporting BRAC Bank, we are continuing our efforts to help Bangladesh recover and foster a resilient post-pandemic economic landscape.”
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