Brac’s Tk1,350cr bond gets micro credit approval
The leading microcredit provider of Bangladesh has opted to issue bonds for fuelling its microfinance programme for rural and urban micro businesses
Brac, the first non-government organisation (NGO) in the country, received approval from the Microcredit Regulatory Authority (MRA) to issue Tk1,350 crore zero-coupon bonds on Thursday.
The leading microcredit provider of Bangladesh has opted to issue bonds for fuelling its microfinance programme for rural and urban micro businesses.
On 3 February, the Bangladesh Securities and Exchange Commission (BSEC) also approved the issuing of the bond.
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The face value per unit of the bond is Tk1 crore, and it will be issued to institutional investors and high-net-worth individuals through private placement.
The bond is unsecured, non-convertible and fully redeemable with its tenure from one and a half years to five years.
Thanking all the regulatory authorities, Brac Chief Financial Officer (CFO) Tushar Bhowmik said, "Clients' savings and bank borrowings were the main sources of funds for our microfinance. Now, the bond issuance also comes as an alternative source of funding for the microcredit institutions."
He expected that the bonds would open up avenues for non-lender institutions to invest in Brac's microfinance programme.
He said it is great recognition for the microfinance sector and expressed gratitude to all regulatory bodies for the cooperation along the way.
Brac expects that the bonds will help improve the livelihoods of people who need access to affordable financial solutions, especially in marginalised communities, in a more efficient way.
MRA Executive Vice-Chairman Fashiullah handed over the approval letter to Tushar Bhowmik in a small ceremony organised by MRA on its premises.
MRA Executive Director Laxman Chandra Debnath, Directors Muhammad Mazedul Haque and Md Nure Alom Mahadi and Brac Associate Director Ashit Baran Das were also present at the ceremony.
RSA Advisory Limited is acting as a lead arranger and MTB Capital Limited is acting as trustee to the bond.
Brac's journey began in Sulla upazila of Sunamganj in Sylhet in 1972. Having access to finance was necessary for people living in poverty to break the cycle.
Realising their need, Brac first loans in 1974 to fishermen in Sulla. To date, the Brac microfinance programme has reached 7.4 million clients with financial services.
