Pakistan: Expanding Access to Credit for Agriculture and Micro, Small and Medium-Sized Enterprise Borrowers

Nonsovereign (Private) Project | 50171-001 Status: Approved

This is an eligible transaction under the Faster Approach to Small Nonsovereign Transactions (FAST) framework. The transaction involves a loan of up to $20,000,000 to Kushhali Bank Limited (KBL) for Expanding Access to Credit for Agriculture and Micro, Small and Medium-sized Enterprise (MSME) Borrowers in Pakistan.

Project Details

Project Officer
Cheema, Asif Private Sector Operations Department Request for information
Country
  • Pakistan
Sector
  • Finance
 
Project Name Expanding Access to Credit for Agriculture and Micro, Small and Medium-Sized Enterprise Borrowers
Project Number 50171-001
Borrower/Company
Country
Location
Approval Number
Type of ADB Assistance / Amount
Loan US$ 20.00 million Proposed
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Private sector development
Sector / Subsector

Finance - Finance sector development - Inclusive finance

Gender Equity and Mainstreaming Effective gender mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Private Sector Financial Institutions Division
Responsible ADB Officer Cheema, Asif
Project Sponsor(s)
Description This is an eligible transaction under the Faster Approach to Small Nonsovereign Transactions (FAST) framework. The transaction involves a loan of up to $20,000,000 to Kushhali Bank Limited (KBL) for Expanding Access to Credit for Agriculture and Micro, Small and Medium-sized Enterprise (MSME) Borrowers in Pakistan.
Objectives and Scope

(1) Broadening access to finance: ADB''s funding will help KBL to continue to grow and reach unbanked, lower income customer segments in Pakistan.

(2) Supporting MFB development: By providing funding for on-lending to the Micro, Small and Medium-Sized Enterprise (MSME) segment, ADB has a unique opportunity to support microfinance banking sector reforms and promote credit to the MSME segment.

(3) Provision of longer tenor debt: KBL had historically focused on group loans, with relatively short loan tenors of less than 12 months. As KBL management focuses on diversifying its loan portfolio and grow its MSME loan portfolio, which have relatively longer tenors, KBL needs additional sources of longer tenor financing. Therefore, ADB''s loan will provide scarce medium-term funds to KBL, needed to diversify its product portfolio.

(4) Increase lending to women: KBL is committed to increasing lending to women. A portion of ADB's loan will be dedicated to lending to women.

Linkage to Country/Regional Strategy

(1) Consistency with ADB Strategy and Country 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 borrower''s emphasis on funding segments where the potential for employment and income generation is high will support inclusive growth. The ADB loan will help the borrower provide loans to MSMEs and farmers in order to realize their investment needs. This is consistent with ADB''s country partnership strategy for Pakistan, 2015-2019, which specifically identifies inclusive growth through supporting financial services to segments whose access to finance is limited.

(2) Consistency with Sector Strategy and Relevant ADB Operations: ADB plays a tangible role in supporting the deepening of financial services in Pakistan. ADB has been active in the sector since 2000 through the Microfinance Sector Development Program (MSDP) of which KBL was a beneficiary. The proposed loan to KBL will continue to build on ADB''s past efforts in supporting financial inclusion and widening access to finance.

Safeguard Categories
Environment FI
Involuntary Resettlement FI-C
Indigenous Peoples FI-C
Summary of Environmental and Social Aspects
Environmental Aspects KBL's Social and Environmental Management System (SEMS) Policy is formulated by the SEMS Unit of KBL''s Risk Management Department on October 2012 following IFC''s procedures for micro and small to medium enterprises loans. The SEMS Policy is fully functional at all stages of lending from loan application up to regular monitoring. Based on the review of the current SEMS, some gaps have been identified and KBL will revisit its SEMS to fully comply with ADB''s Safeguards Policy Statement.
Involuntary Resettlement The proposed Loan will fund agriculture and MSME activities and will only provide loan to activities that will not lead to economic or physical displacement.
Indigenous Peoples The proposed Loan will fund agriculture and MSME activities and will only provide loans to activities that will not negatively impact Indigenous Peoples.
Stakeholder Communication, Participation, and Consultation KBL has been very active in client outreach through its CSR activities by providing support to entrepreneurs including women, free cost of mediation services to deserving people, educational assistance and support to vocational training and technical education to improve individual skills.
Timetable for assistance design, processing and implementation
Concept Clearance 26 Oct 2016
Due Diligence
Credit Committee Meeting 26 Oct 2016
Approval 12 Dec 2016
Last PDS Update 17 Oct 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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Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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