Sri Lanka: SRI: SENIOR UNSECURED LOAN TO NATIONS TRUST BANK - SMALL AND MEDIUM-SIZED ENTERPRISES FINANCE PROJECT

Nonsovereign Project | 46924-014

Summary

The project entails a $15 million, 5-year ADB loan to NTB for onlending to SME borrowers. The project will help meet rising demand for financing by SMEs and give them better access to funding. It will also support the growth of Sri Lanka's banking sector by providing longer-term financing. To promote inclusive financial development, the project will include geographic targets for NTB onlending in post-conflict areas, as well gender lending targets to support women involved in SMEs.

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Project Name SRI: SENIOR UNSECURED LOAN TO NATIONS TRUST BANK - SMALL AND MEDIUM-SIZED ENTERPRISES FINANCE PROJECT
Project Number 46924-014
Borrower/Company NATIONS TRUST BANK PLC
Country Sri Lanka
Location Sri Lanka
Approval Number 7382/2987
Type or Modality of Assistance
7382/2987 Loan USD 15.00 million Committed
Strategic Agendas
Drivers of Change
Sector / Subsector Finance - Banking systems and nonbank financial institutions - Small and medium enterprise finance and leasing
Gender Equity and Mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Private Sector Financial Institutions Division
Responsible ADB Officer Asif Cheema
Project Sponsor(s)
Description The project entails a $15 million, 5-year ADB loan to NTB for onlending to SME borrowers. The project will help meet rising demand for financing by SMEs and give them better access to funding. It will also support the growth of Sri Lanka's banking sector by providing longer-term financing. To promote inclusive financial development, the project will include geographic targets for NTB onlending in post-conflict areas, as well gender lending targets to support women involved in SMEs.
Objectives and Scope To support SME lending and to help NTB better manage its growth and to benefit from SME-related technical assistance that is currently being implemented by the IFC. The ADB proceeds will be onlent to SMEs that have an annual turnover not exceeding SLRs600 million. This definition of SLRs600 million is consistent with the CBSL definition. The project will aim to ensure that a minimum of 50% of ADB's facility in SLRs equivalent will be onlent to SMEs outside Colombo and that 30% of this 50% targeted will be onlent to SMEs in the northern, eastern, and southern provinces that were most affected by the civil war and tsunami and are in particular need of access to finance to expand or start new businesses and reduce high levels of unemployment . To promote access to finance for women, 20% of the ADB's facility in SLRs equivalent will be onlent to SMEs owned or controlled by women borrowers.
Linkage to Country/Regional Strategy The project supports institutional and financial sector development and the deepening of the financial sector by increasing the ability of a mid-sized bank to expand lending to SMEs.
Safeguard Categories
Environment FI
Involuntary Resettlement FI
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects The investment is classified category FI (treated as C) for environment as the Nations Trust Bank (NTB) will exclusively use the facility for onlending to small and medium-sized enterprises (SMEs)whose business activities have minimal or no advserse environmental impacts.
Involuntary Resettlement The project is classified category FI (treated as C) for involuntary resettlement and indigenous peoples under ADB's Safeguard Policy Statement. The project will increase access to finance for SMEs and contribute to diversifying the economy through an increased SME share in GDP, as well as result in employment creation. The project will not have any impact on involuntary resettlement.
Indigenous Peoples The project is classified category FI (treated as C) for indigenous peoples under ADB's Safeguard Policy Statement. The project will increase access to finance for SMEs and contribute to diversifying the economy through an increased SME share in GDP, as well as result in employment creation. The project will not have any impact on indigenous peoples as a community.
Stakeholder Communication, Participation, and Consultation
Timetable for assistance design, processing and implementation
Concept Clearance 16 Jul 2012
Due Diligence 12 Sep 2012
Credit Committee Meeting 03 Dec 2012
Approval 06 Feb 2013
PDS Creation Date 01 Apr 2013
Last PDS Update 30 Sep 2014

Safeguard Documents

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Evaluation Documents

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