fbpx 49227-001: GEO: Financial Inclusion for Micro and Small Enterprise Growth | Asian Development Bank

Georgia: GEO: Financial Inclusion for Micro and Small Enterprise Growth

Nonsovereign (Private) Project | 49227-001 Status: Approved

The ADB transactions will support financial inclusion for MSMEs and farmers. The proposed ADB assistance comprises (i) a proposed loan of up to $23,000,000 or its lari equivalent to Credo Microfinance Organization (Credo); (ii) a proposed loan of up to $7,000,000 or its lari equivalent to FINCA Bank Georgia (FBG); and (iii) proposed loans to TBC Bank (TBC) consisting of (a) a subordinated loan of up to $50,000,000 or its euro equivalent or its lari equivalent, and (b) a senior loan of up to $50,000,000 or its euro equivalent or its lari equivalent, for the Financial Inclusion for Micro and Small Business Growth in Georgia.

Project Details

Project Officer
Hruschka, Stefan A. Private Sector Operations Department Request for information
Country
  • Georgia
Sector
  • Finance
 
Project Name GEO: Financial Inclusion for Micro and Small Enterprise Growth
Project Number 49227-001
Borrower/Company Credo Bank JSC
FINCA Bank Georgia JSC
TBC Bank JSC
Country Georgia
Location Nation-wide
Type or Modality of Assistance
7469/3360 Loan USD 23.00 million Approved
Strategic Agendas Inclusive economic growth
Drivers of Change Knowledge solutions
Private sector development
Sector / Subsector

Finance / Inclusive finance

Gender Equity and Mainstreaming Some gender elements
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Hruschka, Stefan A.
Project Sponsor(s)
Description The ADB transactions will support financial inclusion for MSMEs and farmers. The proposed ADB assistance comprises (i) a proposed loan of up to $23,000,000 or its lari equivalent to Credo Microfinance Organization (Credo); (ii) a proposed loan of up to $7,000,000 or its lari equivalent to FINCA Bank Georgia (FBG); and (iii) proposed loans to TBC Bank (TBC) consisting of (a) a subordinated loan of up to $50,000,000 or its euro equivalent or its lari equivalent, and (b) a senior loan of up to $50,000,000 or its euro equivalent or its lari equivalent, for the Financial Inclusion for Micro and Small Business Growth in Georgia.
Objectives and Scope The ADB transactions will support financial inclusion for MSMEs and farmers. The proposed ADB assistance comprises (i) a senior loan for Credo of up to $23 million (or its lari equivalent) with a 4-year tenor; (ii) a subordinated loan for TBC of up to $50 million (or its euro or lari equivalent) with a 10-year bullet maturity; (iii) a senior loan for TBC of up to $50 million (or its euro or lari equivalent) with a tenor of up to 6.5 years; (iv) a senior loan for FBG of up to $7 million (or its lari equivalent) with a 4-year tenor; and (v) a TA grant of up to $1.05 million to support (a) TBC's MSME Academy services; (b) Credo's transformation into a bank; and (c) each of the three banks' efficiency improvements and the development of loan and assistance to skills improvement to MSMEs and farmers, including branchless banking and associated financial literacy programs to their customers.
Linkage to Country/Regional Strategy

Under the Midterm Review of Strategy 2020, ADB aims to strengthen its support for the finance sector by assisting the development of financial infrastructure, institutions, and products and services; and by promoting inclusive growth. The borrowers' emphasis on funding segments where the potential for employment and income generation is high will support inclusive growth. The ADB loans will help the borrowers provide loans to MSMEs in order to realize their investment needs. This is consistent with the government's efforts to promote growth in rural areas and ADB's country partnership strategy for Georgia, 2014 2018.

ADB plays a tangible role in supporting the deepening of financial services in Georgia. Since 2007, ADB has provided nonsovereign loans of $125 million to banks, comprising two loans to Bank of Georgia and one loan to TBC, as well as TA to NBG and TBC. Bank of Georgia and TBC also benefit from ADB's Trade Finance Program, with an exposure limit of $30 million. The loans to TBC will build on the ongoing loan; the loans to FBG and Credo will be the first. ADB nonsovereign efforts align with efforts to develop the local currency bond market, as well as sovereign support for capital markets, including contractual savings under a program approved in 2014. Staff of the ADB Central and West Asia Department participated in processing the transactions.

Safeguard Categories
Environment FI
Involuntary Resettlement FI-C
Indigenous Peoples FI-C
Summary of Environmental and Social Aspects
Environmental Aspects The TBC environmental and social management system (ESMS) complies with ADB's Safeguard Policy Statement. Given the small average size and caps on subloans, the ESMSs of Credo and FBG are adequate. FBG and Credo will improve their ESMSs before introducing small business lending to satisfy ADB's Safeguard Policy Statement requirements.
Involuntary Resettlement The borrowers' business activities have minimal or no adverse environmental impacts and are unlikely to entail impacts on involuntary resettlement and indigenous peoples.
Indigenous Peoples The borrowers' business activities have minimal or no adverse environmental impacts and are unlikely to entail impacts on involuntary resettlement and indigenous peoples.
Stakeholder Communication, Participation, and Consultation The main stakeholders are borrowers of the project's participating financial institutions. They participate through already extensive market research activity conducted by the institutions in determining the most appropriate lending products for individual entrepreneurs. The project's participating financial institutions have extensive national networks of branches and village councilors through which to engage and empower beneficiaries. The various lending products of the institutions that will be supported through the project are designed for specific socio-economic groups such as the poor and excluded to allow for their inclusion in productive economic activity. The project also includes technical assistance to support loan product offerings and enhance the efficiency of services through branchless banking.
Timetable for assistance design, processing and implementation
Concept Clearance 29 Jun 2015
Credit Committee Meeting -
Approval 10 Dec 2015
Last PDS Update 24 Feb 2016

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