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

Nonsovereign Project | 50171-001

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/Economy
    Pakistan
  • Modality
  • Sector
    • Finance
Project Name
Expanding Access to Credit for Agriculture and Micro, Small and Medium-Sized Enterprise Borrowers
Project Number
50171-001
Borrower / Company
  • Khushhali Bank Limited
Country / Economy
  • Pakistan
Location
Nation-wide
Type or Modality of Assistance
Approval Number Facility Fund Source Amount Status
3500 Loan Ordinary capital resources USD 20.00 million Committed
Strategic Agendas
  • Inclusive economic growth
Drivers of Change
  • Private sector development
Sector / Subsector
  • Finance / Finance sector development - Inclusive finance

Gender
Effective gender mainstreaming
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.

    Contact

    Responsible ADB Officer
    Cheema, Asif
    Responsible ADB Division
    Private Sector Financial Institutions Division
    Responsible ADB Department
    Private Sector Operations Department

    Timetable for assistance design, processing, and implementation

    Concept Clearance
    26 Oct 2016
    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.

    The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

    The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

    In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.


    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.

    None currently available.


    Evaluation Documents See also: Independent Evaluation

    None currently available.


    Related Publications

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    The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

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