BRAC Bank to borrow $50m from Germany’s DEG

BRAC Bank Limited has signed an agreement with Deutsche Investitions- und Entwicklungsgesellschaft (DEG) to take a long-term loan totalling $50 million.

BRAC Bank will use the fund to provide loans to local micro, small and medium-sized enterprises. At least half of the fund is earmarked for businesses run by women, said a press release issued on Wednesday.

DEG is a German development finance institution and a subsidiary of KfW Group, supporting private enterprises operating in developing and emerging-market countries.

Founded in 2001, BRAC Bank has been the pioneer in providing SMEs with small-ticket loans without any collateral and giving them access to banking services, especially in rural and semi-urban Bangladesh. The bank fills a gap because small and medium-sized enterprises, which are important for growth and employment in the country, need access to capital.

BRAC Bank thereby contributes to market development in Bangladesh by real-economy financing and generating local income, for example, through paying salaries and interest, said the release.

An important aspect of DEG's support for BRAC Bank is the advancement of women. As part of a ‘Gender Action Plan’, financing offers for female entrepreneurs is to be improved, and the share of women in BRAC Bank’s workforce and at all management levels is to be increased. DEG will assist BRAC Bank through its business support services.

Speaking on the occasion, Selim RF Hussain, Managing Director and CEO of BRAC Bank, said, "The vision of the bank's board, especially its founding chairman Sir Fazle Hasan Abed, who envisioned bringing the unbanked "missing middle" forward through this inclusive banking strategy, is the key to BRAC Bank's success in SME banking.

“Institutionalising SME banking and making it financially viable required strong governance and a customer-centric business model. Our organisation's dynamic culture and dedicated staff drive the company to its pinnacle. However, because this is our mandate, we are unwavering in our commitment to sustain the expansion of SME lending."

Monika Beck, member of DEG’s Management Board, said, "With our financing, we are supporting the growth of a successful financial institution so that it can reach the important target group of small and medium-sized enterprises even better.

“Our support for BRAC Bank in areas such as gender finance is a good example of how we are focusing even more specifically on further increasing our customers’ positive developmental impact. At the same time, we are promoting greater participation of women in Bangladesh’s economic life."

According to the release, BRAC Bank is the largest collateral-free SME financier in Bangladesh. With 200 branches, 456 SME unit offices, 1,000 agent banking outlets and 8,369 employees throughout the country, the bank caters to around 1.3 million customers, many of whom are women living in rural areas.