Catalog

	Table of Contents
p. 109 of 203 BACK | NEXT Foreword 1. Introduction to the Guidelines 2. User Instructions 3. Preparing and Appraising Investment Project 4. Financial Management of Executing Agencies 5. Reporting and Auditing 6. Financial Institutions 6.1. Introduction and Overview 6.2. Reviewing FI Financial Management 6.3. FI Investments 6.4. Assessing FI Performance 6.5. Appraisal Checklist 6.6. FI Reporting and Auditing Issues 7. Knowledge Management

Financial Management and Analysis of Projects

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6. Financial Institutions

6.1. Introduction and Overview

6.1.1. DMCs use FIs to manage funds received from government, MDBs including ADB, other donors, and the financial markets. The FIs act as financial intermediaries in providing loans and equity contributions to public or private sector organizations in sectors, or subsectors, such as agriculture, industry, and small- or medium-scale enterprises.

6.1.2. FIs include commercial banks and other financial institutions. ADB loans to FIs may be referred to as FILs. ADB previously referred to FIs as development finance institutions (DFIs). The World Bank and the African Development Bank refer to FIs as financial intermediaries. They are also known by sectoral titles, such as agricultural banks (AgDBs), industrial banks (IDBs) and housing development banks (HDBs), or as development financial intermediaries, microfinance institutions (MFIs), and microfinance intermediaries.

6.1.3. FIs are expected to generate an interest rate spread (the difference between lending and borrowing rates) that covers all operating costs, including provisions for bad and doubtful debts, and in appropriate circumstances provides a profit. ADB can support FI operations in both the public and the private sectors. In addition to this introduction, this part has five sections:

Back 5.6. Reviewing Auditors' Reports	Next 6.1. Introduction and Overview