IFC, donors help Islamic banks develop collateral-free loans in Bangladesh
Tuesday, 21 July 2009
FE Report
IFC, a member of the World Bank Group, and its donor partners are working with Islamic banks to help them develop collateral-free loans to increase access to finance of small businesses, said a press release.
SouthAsia Enterprise Development Facility (SEDF), managed by the IFC in partnership with the UK Department for International Development and the Norwegian Agency for Development (NORAD), is training Islamic bank officials to help them develop loan products that comply with Islamic principles.
The products will cater to small businesses that do not own immovable property to provide as collateral but need non-microfinance loans worth Tk 1.0 million ($14,300).
These are limited by the central bank's mandated prudential limit of Tk 1.0 million (10 lakh) to a single loan applicant without requiring registered mortgage of land as collateral.
The SEDF also organised a five-day workshop on 'Islamic Banking Product Development' to help develop the capacity of bankers on advanced aspects of Islamic banking.
Senior managers of Islamic banks and Islamic banking divisions of commercial banks attended the workshop, which continued from July 12 to July 16, 2009.
Bangladesh Bank officials involved in Islamic banking policies and supervision were also present in the programme.
"The demand for Islamic products is very high", IFC Programme Manager Roger Handberg said.
"With this product, we hope to accelerate small business growth, especially in rural Bangladesh."
The product is likely to appeal to at least 100,000 small businesses in the first three years if the banks launch and market it well.
The SEDF facilitates the growth of small and medium enterprises (SME) by helping improve their access to finance through a supportive financial infrastructure, financial products development and strengthening of financial institutions, providing quality business services towards strengthening value chains; and helps businesses adapt to the impacts of climate change.
IFC, a member of the World Bank Group, and its donor partners are working with Islamic banks to help them develop collateral-free loans to increase access to finance of small businesses, said a press release.
SouthAsia Enterprise Development Facility (SEDF), managed by the IFC in partnership with the UK Department for International Development and the Norwegian Agency for Development (NORAD), is training Islamic bank officials to help them develop loan products that comply with Islamic principles.
The products will cater to small businesses that do not own immovable property to provide as collateral but need non-microfinance loans worth Tk 1.0 million ($14,300).
These are limited by the central bank's mandated prudential limit of Tk 1.0 million (10 lakh) to a single loan applicant without requiring registered mortgage of land as collateral.
The SEDF also organised a five-day workshop on 'Islamic Banking Product Development' to help develop the capacity of bankers on advanced aspects of Islamic banking.
Senior managers of Islamic banks and Islamic banking divisions of commercial banks attended the workshop, which continued from July 12 to July 16, 2009.
Bangladesh Bank officials involved in Islamic banking policies and supervision were also present in the programme.
"The demand for Islamic products is very high", IFC Programme Manager Roger Handberg said.
"With this product, we hope to accelerate small business growth, especially in rural Bangladesh."
The product is likely to appeal to at least 100,000 small businesses in the first three years if the banks launch and market it well.
The SEDF facilitates the growth of small and medium enterprises (SME) by helping improve their access to finance through a supportive financial infrastructure, financial products development and strengthening of financial institutions, providing quality business services towards strengthening value chains; and helps businesses adapt to the impacts of climate change.