The project involves IFC providing a senior loan of up to $35 million to Bank NISP (NISP, the bank or the company). The senior loan would have a maturity of five years. The IFC loan will help to: - diversify the bank’s liability structure; - reduce the bank’s maturity mismatches; and - support the bank’s core lending activities in the SME sector. The IFC loan will also help bank in expanding its other activities (e.g., mortgage lending) which require longer term funding. The proposed IFC investment is part of a wide ranging effort by the bank to diversify and improve its capital structure and to expand its operations. As such, the bank is also contemplating a 40% capital increase during the course of 2004. Currently, almost all of the bank’s activities are funded by short term deposits (about 85% of total liabilities). By providing longer maturity debt, IFC would help reduce duration and maturity gap, hence reducing the bank’s liquidity risk. While the bank’s capital adequacy ratio of 13.78% (as of 31 Dec 2003) is considered adequate, the planned capital increase would facilitate the bank’s further growth while maintaining a strong capital adequacy ratio.