In a move to assist small and medium-sized enterprises (SMEs) in recovering from the COVID-19 pandemic, the International Finance Corporation (IFC) has granted BRAC Bank Limited a $50 million loan. This investment aims to safeguard employment opportunities and enhance foreign exchange liquidity within BRAC Bank. The funding will specifically support the working capital and trade finance needs of the bank’s SME clients involved in importing and exporting.
This financial support from IFC, coupled with a similar loan provided to Prime Bank earlier this year, serves as a positive signal to the market. It is expected to attract additional international investors who can contribute to fulfilling the foreign exchange financing requirements of local banks and SMEs, as stated by IFC.
This funding falls under IFC’s $8 billion global COVID-19 fast-track financing facility, designed to aid companies during the ongoing public health crisis. The investment is part of the Working Capital Solutions (WCS) program within the COVID-19 response envelope, which allocates $2 billion globally to emerging-market banks. These funds enable such banks to assist struggling firms.
Furthermore, the International Development Association’s Private Sector Window Blended Finance Facility will also support this project. It aligns with IFC’s WCS program and provides assistance to the banking sector.
BRAC Bank, as Bangladesh’s third-largest private bank and the sole SME-focused bank in the country, is acutely aware of the challenges faced by its SME and corporate clients due to the disruptive impact of COVID-19. The scarcity of foreign exchange has further hindered their regular trading operations, as noted by Selim R. F. Hussain, the Managing Director and CEO of BRAC Bank.
The aftermath of the COVID-19 pandemic has resulted in a global economic slowdown, compounded by various factors such as geopolitical events. Recognizing the decline in foreign exchange reserves within export-driven economies like Bangladesh, IFC has been steadfast in supporting the banking sector, said Joon Young Park, IFC’s Portfolio Manager for South Asia. The organization intends to continue its support for key banking partners in Bangladesh, especially those with significant SME portfolios like BRAC Bank, with whom IFC has maintained equity and debt commitments for nearly two decades.
Since 2010, IFC has invested over $3.6 billion to foster the growth of Bangladesh’s private sector, thus generating employment opportunities for its citizens. Throughout the COVID-19 crisis, IFC has already provided more than $360 million in working capital solutions and liquidity support to banks and companies in Bangladesh.
Martin Holtmann, IFC Country Manager for Bangladesh, Bhutan, and Nepal, acknowledged the challenging market conditions that businesses in Bangladesh have faced over the past three years. By extending support to BRAC Bank, IFC aims to contribute to the country’s recovery and foster a resilient post-pandemic economic landscape.
