LankaBangla gets $21m foreign loan for SME funding
The latest funding will be utilised to lend to small and medium enterprises (SME) and projects that have a positive social impact
LankaBangla Finance Limited has recently received two foreign currency loans worth $21 million to strengthen its financing to the small and medium enterprises (SME).
Dublin-based special purpose vehicle (SPV) Financing for Healthier Lives DAC financed $5m while the remaining $16 million was funded by five funds under management of Zurich-based impact investment manager responsAbility Investments AG, LankaBangla said in a statement.
The country's leading non-bank financial institution (NBFI) further said that the latest funding will mainly be utilised to lend to small and medium enterprises and finance projects that have a positive social impact.
SMEs are the hardest hit in the pandemic and affordable loans are supporting them to come back in business, the statement added.
"As responsible bankers, we are maximizing our efforts for SME lending, despite the non-performing loans slightly increased in the segment," said Khwaja Shahriar, managing director and chief executive officer of LankaBangla Finance.
"Foreign funds are helping us diversify our sources of funds and also reduce the cost," he added.
The $21 million fund would cost the NFBI 4.5% interest a year.
Earlier in May this year LankaBangla received another foreign currency loan of $15 million from another Zurich-based investor BlueOrchard Microfinance Fund.
The NBFI also obtained a foreign currency facility of $20 million from Islamic Corporation for the Development of the Private Sector in 2019 mainly for SME lending.
Alongside the state funded stimulus package for the SMEs, commercial banks and NBFIs are also increasingly lending to their SME clients out of their own funds.
LangkaBangla has an increasingly widening network of SME Financing that aims to increase SME loans' share in its entire loan portfolio to 60% in the next 3-4 years. Now, around 26% of LankaBangla's nearly Tk6,000 crore loan portfolio goes to the SME sector.
Khwaja Shahriar said the foreign funding they availed are for a five-year tenure.
"LankaBangla is looking for even bigger funds to further strengthen its SME lending portfolio," he added.