Bangladesh: Microenterprise Financing and Credit Enhancement Project

Sovereign Project | 51269-003

The Microenterprise Financing and Credit Enhancement Project will expand access to finance for unbanked and underbanked microenterprises through Palli Karma Sahayak Foundation (PKSF), a wholesale microfinance apex and its partner microfinance institutions (MFIs) - partner organizations (POs).

Project Details

  • Project Officer
    Gunawardhena, Manohari
    South Asia Department
    Request for information
  • Approval Date
    14 November 2022
  • Country/Economy
    Bangladesh
  • Sector
    • Finance

Related Projects

Project Name Microenterprise Financing and Credit Enhancement Project
Project Number 51269-003
Country / Economy Bangladesh
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 4247-BAN: Microenterprise Financing and Credit Enhancement Project
Concessional ordinary capital resources lending US$ 200.00 million
TA 6990-BAN: Institutional Strengthening for Microenterprise Financing
Financial Sector Development Partnership Special Fund US$ 200,000.00
Technical Assistance Special Fund US$ 800,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Finance / Finance sector development - Inclusive finance - Small and medium enterprise finance and leasing
Gender Equity and Mainstreaming Gender equity
Description The Microenterprise Financing and Credit Enhancement Project will expand access to finance for unbanked and underbanked microenterprises through Palli Karma Sahayak Foundation (PKSF), a wholesale microfinance apex and its partner microfinance institutions (MFIs) - partner organizations (POs).
Project Rationale and Linkage to Country/Regional Strategy MFIs can be an important source of microenterprise financing. However, MFIs also face various constraints including (i) insufficient knowledge and capacity on microenterprise financing, (ii) limited enabling environment for microenterprise operations, and (iii) limited sources of funding. MFI financing is scarce due to the limited funding from Palli Karma Sahayak Foundation (PKSF), a wholesale financing institution for MFIs, and commercial banks. There are also regulatory restrictions on MFIs' savings mobilization. Except for large MFIs, most MFIs have limited access to commercial funding sources. This is due to the commercial banks' limited understanding on the microfinance sector and the preconception on MFIs as high risk borrowers. Current MFIs' funding sources are not keeping pace with the demand. A risk mitigation instrument for MFIs to mobilize commercial sources of funding such as a credit guarantee can be effective to provide additional comfort to commercial banks to expand their lending to MFIs.
Impact

On-farm and off-farm jobs created through institutional and financial support to cottage, micro and small enterprises. (8th Five-Year Plan, 2020-2025)a
Project Outcome
Description of Outcome

1. Microenterprises' access to MFI financing increased

2. Commercial sources of funding to MFIs for microenterprise financing increased
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

PKSF's funding to MFIs for microenterprise financing expanded

Commercial sources of funding to MFIs for microenterprise financing increased

PKSF's and partner MFIs' institutional capacity and viability enhanced
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment FI
Involuntary Resettlement FI-C
Indigenous Peoples FI-C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services Recruitment of consultants shall be governed by the principles and procedures laid down in ADB's Procurement Regulations for ADB Borrowers (2017, as amended from time to time).
Procurement Procurement by subborrowers, if any, will be in accordance with the established private sector or commercial practices acceptable to ADB, as required in Procurement Regulations for ADB Borrowers (2017, as amended from time to time).
Responsible ADB Officer Gunawardhena, Manohari
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Financial Institutions Division-MOF
Timetable
Concept Clearance 01 Jul 2021
Fact Finding 23 Jun 2021 to 24 Jun 2021
MRM 22 Jun 2022
Approval 14 Nov 2022
Last Review Mission -
Last PDS Update 14 Nov 2022

Loan 4247-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Nov 2022 - - 30 Jun 2028 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 200.00 Cumulative Contract Awards
ADB 200.00 16 Nov 2022 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 16 Nov 2022 0.00 0.00 0%

TA 6990-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Nov 2022 - - 31 Dec 2027 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,000,000.00 0.00 0.00 0.00 0.00 0.00 1,000,000.00 16 Nov 2022 0.00

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Tenders

No tenders for this project were found.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.