29011 - RMDC

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Summary of Proposed Investment

Project Number

29011

Company Name

RURAL MICROFINANCE DEVELOPMENT CENTRE LTD

Date SPI Disclosed

Feb 3, 2010

Country

Nepal

Industry

Financial Markets

Projected Board Date

Apr 5, 2010

Status

Active

Sector

Microfinance and Small Business - Non Commercial Banking

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Jun 2, 2010
Signed : Nov 24, 2011
Invested : Feb 4, 2013

Project Description

IFC proposes to invest up to 10% in Rural Microfinance Development centre Ltd (“RMDC”), an apex microfinance wholesale lending institution in Nepal with over 79 microfinance institutions (“MFIs”) as its clients. RMDC was established in 1998 with the support of the Nepal Rastra Bank (“NRB”), the central bank of Nepal, and the Asian Development Bank (“ADB”), with majority stake held by NRB (26%) and 13 commercial banks (67%). RMDC has been playing a promotional and developmental role in the microfinance sector since its inception. RMDC has a primary objective of increasing the number of retail MFIs by identifying potential institutions across the country and assisting them to become quality MFIs by providing intensive training and technical support, along with loan funds for on-lending to individual microfinance borrowers.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	0.80

Development Impact

The Project is expected to have the following development impact: (i) Increased access to finance for low income households as the outreach of microfinance programme has been severely limited; (ii) Facilitating microfinance program expansion in under penetrated mid-western and far western regions of Nepal; and (iii) developing institutional capacity of MFIs through RMDC’s extensive training programs.

IFC's expected additionality in the Project is as follows: (i) IFC has a wide range of institution building experience in emerging markets as well as micro finance sector, which is expected to benefit RMDC in its future growth plans; (ii) IFC’s participation will provide RMDC access to international best practices; and (iii) IFC’s investment will have a demonstration effect to help RMDC mobilize additional funding from other private investors.

This project involves IFC’s support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. RMDC will be required to:

Develop a procedure relevant to its business process, prior to commitment, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the IFC Microfinance exclusion list;
Identify qualified persons to manage and implement the procedure;
Demonstrate commitment and resources to implement the procedure;
Demonstrate commitment to apply the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions ; and
Submit a periodic report to IFC as per a format to be provided by IFC.

Furthermore being an apex and wholesale micro finance lending organization, RMDC would need to commit to establishing a similar screening process in its portfolio clients.

Contacts

For Inquiries About the Project, Contact

Mr. Shankar Man Shrestha P.O. Box 20789, Putalisadak Kathmandu, Nepal Telephone: 977-1-4268020 Fax: 977-1-4247702 Email: rmdc@wlink.com.np

For Inquiries and Comments About IFC, Contact

General IFC Inquiries IFC Corporate Relations 2121 Pennsylvania Avenue, NW Washington DC 20433 Telephone: 202-473-3800 Fax: 202-974-4384E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

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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