fbpx 49188-001: LOLC Finance and LOLC Micro Credit | Asian Development Bank

Sri Lanka: LOLC Finance and LOLC Micro Credit

Nonsovereign (Private) Project | 49188-001 Status: Approved

Approximately 59% of Sri Lankans do not have access to credit. To improve access to finance for MSMEs and strengthen the leasing sector in Sri Lanka, a project consisting of (i) a senior loan of up to $25 million to LOLC Micro Credit Ltd. (LOMC) and (ii) a senior loan of up to $30 million to Lanka Orix Finance PLC (LOFC) is proposed. LOMC and LOFC are subsidiaries of Lanka Orix Leasing PLC (LOLC), a well-known, diversified company listed on the stock exchange with assets of over $1.65 billion. The loans will also target underserved geographical areas to promote greater access to finance.

Project Details

Project Officer
Gunawardhena, Manohari Private Sector Operations Department Request for information
Country
  • Sri Lanka
Sector
  • Finance
 
Project Name LOLC Finance and LOLC Micro Credit
Project Number 49188-001
Borrower/Company LOLC Finance PLC
LOLC Micro Credit Limited
Country Sri Lanka
Location Nation-wide
Type or Modality of Assistance
7457/3324 Loan USD 25.00 million Approved
7457/75 Other USD 45.00 million Approved
7458/3323 Loan USD 30.00 million Approved
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Finance / Small and medium enterprise finance and leasing

Gender Equity and Mainstreaming Effective gender mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Gunawardhena, Manohari
Project Sponsor(s)
Description Approximately 59% of Sri Lankans do not have access to credit. To improve access to finance for MSMEs and strengthen the leasing sector in Sri Lanka, a project consisting of (i) a senior loan of up to $25 million to LOLC Micro Credit Ltd. (LOMC) and (ii) a senior loan of up to $30 million to Lanka Orix Finance PLC (LOFC) is proposed. LOMC and LOFC are subsidiaries of Lanka Orix Leasing PLC (LOLC), a well-known, diversified company listed on the stock exchange with assets of over $1.65 billion. The loans will also target underserved geographical areas to promote greater access to finance.
Objectives and Scope The loan will provide critically needed longer tenor funding to MSMEs in Sri Lanka, whose ability to access funds has been constrained by the country's low level of finance sector development including the absence of a well-developed capital market which limits availability of such funding, particularly for NBFIs. ADB financing will support longer tenor leasing products and also allow for recycling of shorter-term microloans.
Linkage to Country/Regional Strategy Under the Midterm Review of Strategy 2020, ADB aims to strengthen its support for the finance sector by supporting the development of financial infrastructure, institutions, and products and services, and by promoting inclusive growth. Through such initiatives, ADB will continue to (i) help channel the region's savings into productive investments, and (ii) build the capacity of financial institutions by introducing international best practices. The proposed investment supports institutional and financial sector development through the deepening of the financial sector and the provision of funding for MSME onlending in urban and rural areas. Financial development will also be supported through the TA, which will strengthen the bank's onlending capacity (footnote 32). The project is also aligned with ADB's Gender Equality and Women's Empowerment Operational Plan, 2013 2020.
Safeguard Categories
Environment FI
Involuntary Resettlement FI
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects The investment is classified as category FI treated as C for impacts on the environment.
Involuntary Resettlement The investment is classified as category FI treated as C for impacts on involuntary resettlement.
Indigenous Peoples The investment is classified as category FI treated as C for impacts on indigenous peoples.
Stakeholder Communication, Participation, and Consultation The financial intermediaries will comply with national labor laws and, pursuant to ADB's Social Protection Strategy (2001), will take measures to comply with internationally recognized core labor standards. LOFC and LOMC will report regularly to ADB on (i) their compliance with such laws and (ii) the measures taken. Information disclosure and consultation with affected people will be conducted in accordance with ADB requirements. Proactive gender features are included in the project design to support the project's effective gender mainstreaming category.
Timetable for assistance design, processing and implementation
Concept Clearance 30 Jun 2015
Credit Committee Meeting 28 Sep 2015
Approval 19 Nov 2015
Last PDS Update 01 Apr 2016

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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