MANILA, PHILIPPINES - The Asian Development Bank (ADB) has expanded its Trade Finance Facilitation Program (TFFP) in Bangladesh with the signing today of 12 more agreements under the program in the South Asian nation.
The agreements with Bank Asia Ltd., BASIC Bank Ltd., Dhaka Bank Ltd., Dutch Bangla Bank Ltd., Eastern Bank Ltd., Export Import Bank of Bangladesh Ltd., National Bank Ltd., Premier Bank Ltd., Prime Bank Ltd., Southeast Bank Ltd., Standard Bank Ltd., and United Commercial Bank Ltd. should give the banks additional room to offer trade finance support to importers and exporters in Bangladesh, providing additional impetus for the local economy.
"Just as in other developing economies, some firms in Bangladesh, particularly smaller companies, find it difficult to get hold of the trade finance they need to buy key components and final goods from overseas or to ensure timely payment for products they are selling abroad," said Paul Heytens, Country Director for ADB's Bangladesh Resident Mission.
The TFFP was set up in 2004 and was expanded to a $1 billion program in March this year after ADB perceived a growing and urgent need to help address the lack of finance that was holding back trade, particularly in developing economies. Under the program, the triple-A rated ADB provides loans and guarantees through, and in conjunction with, local and international banks to back trade transactions.
In the first 10 months of this year, the program supported over $1.3 billion in trade, a 125% increase over the $578 million that it supported in 2008.
In addition to providing the finance, the program links banks and firms in developing economies into global trading and banking networks. This builds relationships and spurs knowledge sharing that will help banks and their clients in the longer term.
"In our increasingly globalized world, it's essential that banks and companies are able to fully participate in the gradual recovery of the world economy. By bolstering trade, jobs are created and family incomes increase, reducing poverty and directing spending into the local and global economies," said Philip Erquiaga, Director General of ADB's Private Sector Operations Department that manages the trade finance program.
The latest agreements add to those previously signed by fellow Bangladeshi banks Eastern Bank Ltd. and Southeast Bank Ltd.
This year, ADB has expanded its trade finance program into a number of countries for the first time, while the number of participating banks elsewhere has also increased. In recent months, for example, ADB has signed TFFP agreements with banks in Sri Lanka, Pakistan, Nepal and Indonesia. It expects to continue to expand the geographical scope of the program to Central Asia and elsewhere in 2010.