Deal inked to lift microfinance sector
British International Investment (BII) has signed an unfunded risk participation agreement with a foreign bank operating in Pakistan to cover 50% risk on financing worth $40 million (Rs11.40 billion) for different sectors.
It inked the agreement with Standard Chartered Bank Pakistan Limited (SCB) recently to provide support to the microfinance sector. The execution of the agreement is subject to State Bank of Pakistan’s (SBP) approval with the risk on loans being covered in rupee.
In a statement, SCB said that local currency lending to microfinance institutions in Pakistan was relatively low and the sector relied on foreign currency lending, which accounted for approximately 50% of microfinance funding.
The agreement helps to contribute to the UN’s Sustainable Development Goal (SDG) on enhancing resilience to economic shocks (SDG-1), ensuring economic opportunities for women (SDG-5) and increasing the formalisation and growth of SMEs (SDG-8), the statement added.
British Deputy High Commissioner in Karachi Sarah Mooney said, “BII continues to provide strategic investment to Pakistan’s economy. Innovative financial products such as this are the key to empowering small businesses, creating jobs and increasing sustainable economic growth.”
“This agreement shows the UK’s commitment to achieving SDGs and working together with all Commonwealth members for prosperity and trade.”
Published in The Express Tribune, April 18th, 2023.
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