International Finance Corporation (IFC), a member of the World Bank Group, will invest $25 million, equivalent to around Tk212 crore, in Bank Asia in an effort to support pandemic-hit businesses.
Bank Asia, a local private commercial bank, will use this fund as loans to help businesses continue their operations and retain jobs, according to a circular IFC issued on Sunday.
The bank will provide working capital to help small and medium enterprises (SMEs) and corporate clients continue their operations.
SMEs comprise over 90% of businesses in Bangladesh and employ over 20% of the adult population.
Customers will get loan at 4-5% under the fund, which is comparatively low when lending rate is 9%, said Md Arfan Ali, president and managing director of Bank Asia.
The bank will lend from this fund through its offshore banking unit and borrowers will get loans in foreign currency, he said.
"IFC has been a reliable partner and this fresh investment will allow us to extend critical working capital and trade finance in the form of forex liquidity to pandemic-affected businesses," said Ali.
"We can now provide additional financial support to businesses, particularly export- and import-based SMEs and other corporate clients, that ultimately impact thousands of suppliers and employees who depend on them."
The financing package is part of IFC's $8 billion global Covid-19 fast-track financing facility, aimed at helping companies stay afloat during the ongoing public health crisis.
This investment comes under the Working Capital Solutions (WCS) programme of the Covid-19 response envelope, which provides $2 billion globally to emerging-market banks, enabling them to support struggling firms.
The International Development Association's Private Sector Window (IDA PSW) Blended Finance Facility is also supporting IFC's WCS programme with a first-loss guarantee of up to $215 million in eligible countries, including Bangladesh.
Bank Asia, an IFC client since 2014, is one of the leading private-sector commercial banks in Bangladesh.
"SMEs are key to ensuring a resilient and inclusive recovery and therefore, they need to be supported as part of any meaningful recovery strategy," said Rosy Khanna, IFC regional industry director of Financial Institutions Group – Asia and Pacific.
"IFC is committed to supporting its clients in Bangladesh in this important endeavour through trade finance solutions."