Bangladesh : Microenterprise Financing and Credit Enhancement Project
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
Sectors Group
Request for information -
Country/Economy
Bangladesh -
Sector
- Finance
Related Projects
| Project Name | Microenterprise Financing and Credit Enhancement Project | ||||||||||
| Project Number | 51269-003 | ||||||||||
| Country / Economy | Bangladesh |
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| Project Status | Active | ||||||||||
| Project Type / Modality of Assistance | Loan Technical Assistance |
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| Source of Funding / Amount |
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| Operational Priorities | OP1: Addressing remaining poverty and reducing inequalities OP2: Accelerating progress in gender equality OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability OP6: Strengthening governance and institutional capacity |
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| Sector / Subsector | Finance / Finance sector development - Inclusive finance - Small and medium enterprise finance and leasing |
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| Gender | Gender equity theme | ||||||||||
| 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 |
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| 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 | Sectors Group |
| Responsible ADB Division | Finance Sector Office (SG-FIN) |
| 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 | 06 Dec 2022 | 16 May 2023 | 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 | 05 Dec 2023 | 50.00 | 0.00 | 25% |
| Counterpart | 0.00 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 05 Dec 2023 | 50.00 | 0.00 | 25% |
TA 6990-BAN
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 14 Nov 2022 | 29 Dec 2022 | 29 Dec 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 | 05 Dec 2023 | 27,836.96 |
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