33268 - CFPA MFI Loan

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Summary of Investment Information

Project Number

33268

Company Name

CHONGHO BRIDGE GROUP LIMITED

Date SPI Disclosed

Apr 5, 2013

Country

China

Region

East Asia and the Pacific

Projected Board Date

May 10, 2013

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Aug 5, 2014
Signed : Sep 5, 2014
Invested : Dec 3, 2014

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed project intends to provide an RMB loan of up to US$20 million equivalent to CFPA Microfinance Management Co., Ltd (CFPA MFI or the Company) , an IFC existing client, to expand micro credit lending to rural population. The RMB fund is going to be obtained through the swap facility with IFC partner banks. The proposed tenor is up to 5 years.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
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 Microfinance Borrowers

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

Development Impact

1) IFC will continue to bring global microfinance knowledge and good practice in orgnization structure, credit management, risk management and internal control to the Company.
2) IFC has accumulated significant experience and market knowledge through investing in China''s banking sector. IFC is one of the few international investors who understand the Chinese culture and know how to work with local partners.
3) Funding is a major constraint for CFPA MFI in expanding its micro credit operations. As a non-deposit taking MFI and a domestic entity with no capacity to access international funding, CFPA MFI relies on whole-sale borrowings from Chinese banks, which exposes it to funding volatility. IFC''s local currency funding will help address this issue and diversify CFPA MFI''s current funding structure.

E&S Category Rationale / Risks and Mitigation

This project involves an investment of RMB loan of US$20 million equivalent to support CFPA to expand its micro credit lending to rural population and has been categorized as FI-3 in accordance with IFC’s Environmental and Social Review Procedure. CFPA provides about 98% of its total loans for group and individual micro lending. The industry sector exposures mainly are agribusiness, whole/retail/trade and transportation services. The activities likely to be supported by this project entail minimal potential E&S risk and impact. Being an existing IFC client, CPFA has developed an E&S practice for the lending activities. For this project, CFPA will be required to upgrade the existing E&S practice into an environmental and social management system (ESMS) for ensuring compliances with IFC exclusion list and applicable national E&S laws and regulations. References of IFC exclusion list and a full list of applicable national E&S Laws and regulations should be incorporated in the ESMS documentation. CFPA will also be required to continue complying with IFC Performance Standard 2 Labor and Working Conditions for its own labor practices.

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