The duo has closed a $22 million term financing to support BRACÆs micro-lending in Bangladesh. The five-year amotising facility will be provided in the Bangladeshi local currency, the taka.
BRAC is one of the largest micro-finance institutions in the world. The long tenor of the Citi-IFC facility will bolster BRACÆs micro-credit and lending to the small and medium enterprise (SME) segments.
In July 2007, Citi led a financing for BRAC via which the US bank raised $42 million in taka. The current $22 million tranche includes an $18 million partial credit guarantee from the IFC. By sharing the risk with IFC, Citibank in Bangladesh will be in a position to extend additional long-term, local currency funds to BRAC.
ôWith this guarantee, BRAC will be able to reduce its dependence on grants for growth and outreach to poor people, particularly women borrowers,ö says Lars Thunell, IFC executive vice president and CEO in a written statement.
Citi has a recent history of working with BRAC. This included the issuance of the worldÆs first triple-A rated local currency securitisation of micro-credit receivables in 2006, a remittance distribution arrangement and a backstopped facility for BRAC.
IFC has also worked with BRAC on projects in housing finance and SME lending in the past.
BRAC is the largest non-governmental organisation in the world offering micro-finance and development programmes across all 64 districts in Bangladesh, a country where half of the population lives below the poverty line. It also offers micro-loans to women through its group-lending methodology.
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