ADB invests in SME financing

The Asian Development Bank (ADB) has approved a $40-million loan to Prasac Microfinance Institution Limited to expand lending to local SMEs.

With the move, the bank hopes to contribute to the development of the financial industry by supporting the SME sector – which it considers an ‘underserved segment’ – through enhanced access to long-term finance.

“Prasac has identified a large unbanked and underserved market in rural areas that can contribute to greater inclusion in productive economic activity if given access to their lending products,” the bank’s midterm review of Strategy 2020 said.

“The microfinance institution (MFI) has assessed the needs of these clients through market research and information outreach activities. Prasac will continue to work with its clients and untapped markets to improve understanding of their needs and adapt products to serve them better,” it read.

Prasac vice president Say Sony said they will be receiving a syndicated loan. He said its maturity will be four years, although he did not disclose the interest rate that will apply.

“The purpose of the loan is to help us help SMEs expand their operations,” Mr Sony said.

He said that Prasac’s total assets now stand at $2.1 billion, with a loan portfolio of more than $1.75 billion and 393,500 borrowers. The MFI has $1.11 billion in deposits with more than 552,500 customers.

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