39706 - WCS BRAC III

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Summary of Investment Information

Project Number

39706

Company Name

BRAC BANK LIMITED

Date SPI Disclosed

Nov 17, 2017

Country

Bangladesh

Region

South Asia

Projected Board Date

Dec 20, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Mar 27, 2018
Signed : Mar 29, 2018
Invested : Apr 3, 2018

Sector

Commercial Banking - General

Project Description

The project consists of a short-term loan (Working Capital Solutions, WCS) for up to $40 million to BRAC Bank Ltd. (the Bank or BRAC Bank) to support the foreign currency needs of small and medium enterprises (SMEs) in Bangladesh. The financing provided is a fit with the World Bank and IFC strategy of promoting economic growth by providing access to finance to underserved market segments and promoting international trade, thereby leading to improved competitiveness, job retention and creation.

The Bank was established in 2001 to assist the development of rural SMEs whose financial needs were not met by the conventional banking channels and has total assets of $3.5 billion as of September 30, 2017.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
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

1. Improved Access to Credit: The Project will increase access to finance for credit-constrained, export-oriented companies and SMEs to meet working capital requirements. It will also expand financial intermediation. IFC's investment will further support business growth and spur job creation in the SME and export-oriented segments. 2. Boost Export Competitiveness: IFC's investment will help to accelerate economic growth in Bangladesh by providing SMEs and exporters with trade finance solutions to their working capital requirements, and help them pay for imports needed in the value chain.

1. Financial Risk Mitigation - Provide Term Funding: Through local partner banks, IFC provides much-needed working capital to local SMEs. Foreign currency funding continues to be scarce in Bangladesh, as the macro risk remains high. IFC is uniquely placed to improve access to finance for SMEs through the WCS product, which provides working capital to local importers and exporters, especially in the RMG sector. 2. Environmental and Social Management System ("ESMS") - IFC would continue to assist the Bank to ensure screening of trade transactions against the IFC Exclusion List, additional eligibility criteria, and Host Country Laws and Regulations.

E&S Category Rationale / Risks and Mitigation

The project consists of a short-term loan (Working Capital Solutions) for up to $40 million to BRAC Bank Ltd, an existing IFC client, to support the foreign currency needs of small and medium enterprises (SMEs) in Bangladesh. The on lending will primarily comprise providing working capital financing through short-term loans to importers/exporters, the majority of which are SMEs. The project presents medium E&S risks and impacts which are readily manageable. Hence, the project is categorized as Category FI-2. The E&S requirements will include IFC Exclusion List, additional list of restricted commodities and national E&S laws and regulations.

The main E&S risks and impacts of the project relate to occupational health and safety, labour and working conditions, and pollution aspects at the client’s SME borrower’s premises and supply chain concerns associated with some commodities. Since the bank is an existing IFC client it has developed an E&S risk management system, which is also aligned with the Central Bank Bangladesh guidelines. The E&S risk management system incorporates screening against IFC exclusion list and restricted commodity list and includes due diligence procedures for assessment of compliance with relevant national E&S laws and regulations. The client has appointed a senior officer as in-charge of implementing the E&S risk management system. The client is also in compliance with IFC Performance Standard 2 on labour and working conditions.

Contacts

For Inquiries About the Project, Contact

BRAC Bank Limited
Mr. Md. Shaheen Iqbal
Head of Treasury & Financial Institutions
+88 02-8801261
shaheen.iqbal@bracbank.com
Tejgaon-Gulshan Link Road, Dhaka-1208, Bangladesh
https://www.bracbank.com/

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Telephone: 202-473-3800
Fax: 202-974-4384

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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