The Asian Development Bank (ADB) has joined up with global bank Citi to provide $100 million in local currency loans for microfinance institutions in developing Asia under the Microfinance Risk Participation and Guarantee Program.
“We’re excited to partner with Citi, an established player in microfinance in many countries in developing Asia,” said Christine Engstrom, director in the private sector operations department, ADB.
“Our partnership will help further expand the Microfinance Program, which has already facilitated more than $370 million in local currency loans across the region since 2012. Together, Citibank and ADB will improve access to financial services to even more low-income families and small business owners, especially in rural and remote areas in Asia and the Pacific.”
The Microfinance Program is backed by ADB’s AAA credit rating and provides risk sharing and guarantees to international and local partner financial institutions. It has supported more than two million microfinance borrowers, primarily in India, Bangladesh, and Indonesia. More than $200 million in private sector co-financing has been raised so far through the program.
In developing Asia, many microfinance institutions struggle to access funds for growth from the traditional banking system. ADB fills market gaps by sharing risks with commercial banks to promote local currency lending to those institutions and helps to reduce the currency risk.
ADB is owned by 67 members, with 48 from within the region. It assisted a total of $27.2 billion of financing, including co-financing of $10.7 billion, in 2015.
Citi provides financial services and products to approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions.