42930 - DAVR Bank Loan

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Summary of Investment Information

Project Number

42930

Company Name

PRIVATE JOINT-STOCK COMMERCIAL BANK DAVR-BANK

Date SPI Disclosed

Nov 22, 2019

Country

Uzbekistan

Region

Central Asia and Turkiye

Projected Board Date

Jan 21, 2020

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Feb 25, 2023

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : Feb 26, 2020
Signed : May 22, 2020
Invested : Dec 3, 2020

Sector

Commercial Banking - SME Finance

Project Description

IFC will provide US$5 million equivalent, Uzbek Sum (“UZS”) - linked Working Capital Solution (“WCS”) facility and a GTFP line with up to US$1 million limit to Private Joint Stock Commercial Bank DAVR-BANK (“DAVR Bank” or the “Bank”), to support the Bank’s local currency financing of micro, small and medium enterprises (“MSMEs”) and help it expand offering to women-owned MSMEs.

DAVR Bank was founded and started its activity on September 29, 2001 in the city of Tashkent. The Bank operates as a universal bank providing a wide range of services to legal entities (mostly MSMEs) and individuals. DAVR Bank has 7 branches and one mini-bank, all located in Tashkent and as of IH2019, had a staff of over 450 employees, serving 12,000 corporate and 158,000 retail customers.

Associated Advisory Engagement

IFC investment will be supported by a targeted advisory engagement to strengthen the Bank’s capacity and competencies in effectively addressing and servicing the banking needs of women-owned businesses; and a GTFP Trade Advisory program to help improve the Bank’s trade finance and sales capabilities.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	5.0
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 MSME (mix of Micro and SME)
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

E&S Category Rationale / Risks and Mitigation

The project is a senior loan to support the Bank’s financing of micro, small and medium enterprises. Overall E&S risks associated with these transactions are considered as medium and, therefore, the project has been categorized as FI-2 in accordance with the IFC’s Sustainability Policy. The bank does not finance cultivation of cotton, and its exposure to textile sector is less than 1%. IFC funds will not be used to support any coal-related activities, or higher risk business activities that may include: a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant occupational health and safety risks. For this investment, the client will be required to screen MSME loans against the IFC Exclusion List, and Uzbekistan E&S laws and regulations. In addition, DAVR Bank will need to be in compliance with Life & Fire safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

The key challenge in this investment will be for the Bank to have adequate systems and capacity in place to manage the E&S risks associated with the MSME transactions. DAVR Bank has assigned an ESMS Officer and operates an Environmental and Social Management System (ESMS), which has been developed at request of international finance institutions to monitor E&S risks associated with financing supported with their funds. For this project the bank will need to ensure the ESMS incorporates IFC’s requirements, covers the bank’s entire MSME portfolio, and incorporates supply chain risk management mechanism for its textile loans to ensure the cotton sector related labor risks are effectively assessed and mitigated. Additionally, the Bank, in full compliance with the requirements of IFC's PS2 on Labor and Working Conditions, will be required to strengthen its own HR system to prevent any forced labor risks related to the situation in the cotton sector in the country, as well as submit annual environmental and social performance reports to IFC.

Contacts

For Inquiries About the Project, Contact

Private Joint Stock Commercial Bank "DAVR-BANK“
Mr. Mirsodik Mirzakhidov
Director of Coordination and Monitoring Investment Activity Department
+998712070909 + 124
Mirsodiq.mirzahidov@davrbank.uz
Navoi-Zarqaynar street, Block “A”, Shayhantoxur district, Tashkent, Uzbekistan, 100021
https://davrbank.uz/

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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.

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

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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.

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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.

Action	Action Due Date
Revise ESMS in line with IFC’s requirements	COD
Develop E&S training plan	COD
Carry out training and submit the corresponding records	Within 3 months from disbursement
Enhance internal grievance mechanism	COD
Submit ESMS implementation records	Within 6 months from disbursement

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