ADB, Hatton National Bank Partner to Provide $20 Million for Microfinance in Sri Lanka
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The Asian Development Bank (ADB) today signed an agreement with Hatton National Bank (HNB), under ADB's Microfinance Risk Participation and Guarantee Program, to expand local currency lending and provide guarantees of up to $20 million to the microfinance sector in Sri Lanka.
The agreement was signed by ADB's Private Sector Financial Institutions Division Senior Investment Specialist Ms. Sabine Spohn and HNB Deputy General Manager - SME & Midmarket Mr. Jude Fernando at a ceremony in Colombo.
We are excited to partner with HNB, an established player in microfinance in Sri Lanka, said Ms. Spohn. Our partnership will help further expand the Microfinance Program, which has already facilitated more than $846 million in local currency loans across the region since 2012. Together, HNB 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 Sri Lanka.
Currently, many microfinance institutions struggle to access funds for growth from the commercial market to meet the demands of clients. Only approximately 17% of women have access to formal financial services in Sri Lanka. Through the Microfinance Program, ADB aims to fill market gaps by sharing risks with commercial banks to promote local currency lending to these institutions. This helps mitigate microfinance institutions' exposure to foreign exchange risks.
This collaboration represents another key step in HNB's strategy to expand service to the low-income population, build on our in-depth experience in Sri Lanka, and further expand the bank's support to the microfinance segment, said Mr. Fernando.
Backed by ADB's AAA credit rating, the Microfinance Program provides risk sharing and guarantees to international and local partner financial institutions. Since 2012, the Microfinance Program has supported more than 4.47 million microfinance borrowers, who are predominantly women, primarily in India, Bangladesh, Indonesia, and Myanmar. To date, more than $440.73 million private sector cofinancing has been raised through the program.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members�48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.
Source: Asian Development Bank