IFC, VF to enhance credit for small RMG factories

The International Finance Corporation (IFC) has planned to expand its newly-launched small credit facility for readymade garment (RMG) factories, not covered by Accord and Alliance as it continued discussion with 10 more brands in line with the IFC product to ensure workers' safety.
IFC Global Sector Head, Tourism, Retail and Property Sector Olaf Schmidt said the speedy but low interest rate credit facility will be provided depending on strong audit reports of the factories and their action plans to meet IFC environmental and social compliance issues which include safety.
The IFC senior executive talked to the FE in line with the Apparel Summit on Monday evening after the Corporation announced its support to three apparel factories with US$1.2 million credit in partnership with VF Corporation, a company having highly diversified portfolio of 30 powerful brands.
The VF and the IFC are granting loans ranging from $100,000 to $1 million to the VF's supplier factories as part of the lending programme to help suppliers assess and manage performance standards in environmental and social risks.
The IFC and its partner BRAC Bank are lending up to $10 million to the VF's contract suppliers in the first-ever IFC new credit system for developing countries. Three factories will get $1.3 million from the new credit system.
The IFC Global Sector head said among the 10 brands with whom the IFC has discussions, some have already been found positive.
Mr Olaf said the IFC started with Accord and Alliance factories at the beginning as these are good platforms for selecting those factories performing a tremendous job in meeting compliance issues.
But he said scope for factories, not covered by  Accord and Alliance, is also open after these comply with the IFC performance standard and have action plan to be implemented for safety of workers and factories..
He said availability of remedial financing product will depend on strong balance sheet and strong financial performance of the factories which want to implement the action plan at their level.
The IFC support is to provide guarantee to avail the funding very quickly and efficiently at low cost as it will have the support from the buyers, he added
Mr Olaf said the BRAC Bank has been engaged by the IFC as its agent bank and will work for preparing the documents to apply for small but attractive loan having below 5 per cent interest.
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