ADB?s $250 Million Risk Programme to Expand Microfinance to Poor
Tuesday, December 14, 2010
By Sajid Chaudhry
ISLAMABAD: The Board of directors of the Asian Development Bank’s (ADB) has approved a Microfinance Risk Participation Programme, marking ADB’s first large scale private sector microfinance initiative.
An ADB statement issued here on Monday said the programme will allow ADB to partner with financial institutions that actively lend to microfinance institutions (MFIs) in ADB’s developing member countries, and to share the default risk on underlying MFI loans.
The programme will support expansion of lending to MFIs, in turn enabling increased provision of financial services to the underserved. This will help address the significant unmet demand from the poor for financial services, and provide additional funding for micro-borrowers.
Under the terms of the programme, ADB will typically assume up to 50% of the default risk on loans made to MFIs, in aggregate up to a maximum of $250 million.