Brac, the world's largest microfinance providing non-governmental organisation (NGO), has received the approval of the securities regulator to issue a bond worth Tk1,350 crore to expand its rural and urban business.
On Wednesday, the Bangladesh Securities and Exchange Commission (BSEC) allowed the Dhaka-based development organisation to become the first NGO in the country to raise capital through issuing a bond.
Institutional investors and high-net-worth individuals will be able to purchase each unit of the bond at a face value of Tk1 crore.
The tenure of the bond will be from one-and-a-half years up to five years and its characteristics are: unsecured, non-convertible, fully redeemable, and zero-coupon.
As per the BSEC's rules, the bond must be traded on the alternative trading board of the Dhaka Stock Exchange.
"We are very delighted to receive this approval from BSEC and it is indeed a great milestone achievement for both the microfinance sector and the bond market of Bangladesh," said Tushar Bhowmik, chief financial officer (CFO) at Brac.
The CFO however said approval from Microfinance Regulatory Authority (MRA) is still pending and expected that it will be granted soon to operationalise the issuance of the bond.
Brac's sizable programme – contributing to one-fourth of the nationwide microcredit disbursement – has more than 35 local banks as lenders. However, it often faces difficulty with the single borrower exposure limit.
Brac began its journey in 1972. It started with providing loans to fishermen in Sulla located in the north-eastern district of Sunamganj in 1974.
The group-based loan was the first non-formal loan without interest given by Brac.
In 2019, Brac's microfinance loan disbursement grew 21% and savings of members rose 39%.
Less than a thousand institutions are operating microfinance activities under the licences of the Microcredit Regulatory Authority.
In the middle of 2019, the total outstanding loans of the institutions were Tk78,758 crore, while the members' savings were Tk30,619 crore.