32392 - NDB Loan Package

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Summary of Investment Information

Project Number

32392

Company Name

NATIONAL DEVELOPMENT BANK PLC

Date SPI Disclosed

Apr 4, 2013

Country

Sri Lanka

Region

South Asia

Projected Board Date

May 8, 2013

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jul 22, 2023

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : May 17, 2013
Signed : Jun 18, 2013
Invested : Oct 4, 2013

Sector

Finance Companies

Project Description

The project involves providing a loan of US$ 24 Mn to NDB, for on-lending to their SME business.

National Development Bank PLC (NDB) is a listed Sri Lankan bank, which was established via a merger of the National Development Bank of Sri Lanka (NDBSL) and its commercial banking subsidiary, NDB Bank Limited (NBL), in August 2005. NDB provides a broad range of financial products and services, including project finance, Bancassurance, housing finance, investment banking and stock-broking services via subsidiaries and associate companies.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	34.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Three decades of conflict in the past had limited the Sri Lankan government''s capacity to support the SME sector and thereby to allocate crucial resources to boost lagging incomes. The proposed project will help in addressing this constraint by funding the Bank''s operations/expansion and promoting financial inclusion by means of financing of SMEs.

The proposed project would facilitate private sector development via access to credit for growing SMEs in Sri Lanka. Given the importance of SMEs in Sri Lanka, the cascading effect of this finance would go a long way in creating employment, reducing poverty and stimulating the economy.

This project will provide long term financing not readily available in the market to a targeted financial institution in Sri Lanka. This long term financing would allow the Bank to expand its SME operations. It is IFC''s counter cyclical role to provide liquidity to SMEs when Bank''s are being required to limit their SME lending growth due to liquidity shortage both in LKR and USD.

IFC has had a long standing relationship with NDB borne of previous advisory as well as investment engagements. The proposed project would affirm IFCs commitment to NDB as a strategic partner. It will also affirm IFC''s recent work with banks in Sri Lanka and accordingly, continue to send IFC''s signal of confidence in the financial markets in Sri Lanka and overseas. IFC''s international experience and sector expertise would provide NDB with access to international best practices, sector knowledge and global network.

E&S Category Rationale / Risks and Mitigation

The lending business of the Bank comprises Corporate banking , SME banking and Retail banking. Overall, the existing and proposed lending portfolio present potentially limited adverse environmental or social risks or impacts that will be few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. In rare circumstances, it may also include a very limited number of business activities with potential significant adverse environmental or social risks or impacts that are diverse, irreversible, or unprecedented. Hence, the E&S risk of the proposed investment is medium and the project is categorised as FI-2. The applicable performance requirements will be i) the IFC- FI Exclusion List; ii) The host country E&S laws and regulations; and iii) the IFC Performance Standards.

Main E&S risk and impacts of the project emanates from the project finance, commercial banking and SME finance. These includes impacts like occupational health & safety concerns, labour issues, fire and life safety, solid waste and pollution management and possibly land and biodiversity impacts depending on the nature and location of the project. The bank has an E&S management system in place and the bank will upgrade the system to comply with applicable performance requirements. The bank was found to be in gross compliance with IFC''s requirements of PS-2 on Labour and Working Conditions.

Contacts

For Inquiries About the Project, Contact

Dhanan Senathirajah
Vice President- Finance & Planning
National Development Bank PLC

Telephone:
+94 11 2448448
+94 11 2347917 (Dir)
+94 77 2910678 (Mobile)

Fax:
+ 94 11 2342047

E-mail:
mailto:dhanan.senathirajah@ndbbank.com

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Title & Description	Anticipated Completion Date	Status	Comments	Completion Date
Nominate officers		Completed	Completed	02/21/2014
Establish SEMS		Completed	Completed	11/01/2014
Staff Training		Completed	Completed	10/12/2015

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