• IFC considers 2 unfunded RSFs totalling up to $ 40 m in risk coverage
• Commercial Bank facility to support SME loan portfolio of $ 60 m over 8 years
• NDB facility designed to de-risk $ 20 m SME loan portfolio
• Both banks to receive advisory support to strengthen SME, agri-SME lending capacity

The International Financial Corporation (IFC) is considering entering into unfunded Risk Sharing Facilities (RSFs) with the Commercial Bank of Ceylon PLC and National Development Bank (NDB) PLC to facilitate lending to Small and Medium-sized Enterprises (SMEs), with a particular focus on agricultural SMEs (agri-SMEs) and women-owned SMEs (WSMEs).

According to a disclosure issued by the IFC dated 7 November, the corporation is considering entering into an unfunded RSF with Commercial Bank, whereunder the IFC will take on a maximum risk of $ 30 million equivalent in Sri Lankan Rupees. 

This represents 50% of a loan portfolio of up to $ 60 million equivalent in Sri Lankan Rupees to be extended by Commercial Bank to SMEs.

In its disclosure, the IFC further stated: “The Risk Sharing Facility is expected to have a facility life of up to eight years inclusive of a ramp-up period of up to three years. The project would be processed under the IFC’s Small Loan Guarantee Programme (SLGP), a programmatic approach to de-risking and scaling-up financing for SMEs in eligible countries.”

Similarly, the IFC by a disclosure dated 4 November further revealed that it would be entering into an RSF with NDB Bank as well. Under this RSF, the IFC will take on a maximum risk of up to $ 10 million (Sri Lankan Rupee equivalent), amounting to 50% of an SME loan portfolio of up to $ 20 million (Sri Lankan Rupee equivalent) to be extended by NDB Bank.

The IFC further revealed in both disclosures that it would additionally be providing complementary advisory support embedded within the aforesaid RSFs. This support is intended to help the bank effectively deploy the RSF through training initiatives and by strengthening the capacity of its SME clients.

IFC and IFC Asset Management Company Managed Funds together hold 14.41% of the voting shares of Commercial Bank, which is Sri Lanka’s third largest commercial bank in terms of balance sheet size and branch network. 

Commercial Bank is one of two private Domestic-Systemically Important Banks (D-SIBs) in Sri Lanka. It is the only Sri Lankan bank to have a footprint outside Sri Lanka with its well-established operations in Bangladesh.

– By Shenal Fernando