BRAC Bank has secured a US$50 million financing facility from an international financial institution to expand funding for micro, small and medium-sized enterprises (MSMEs) in Bangladesh, with particular emphasis on women-owned businesses and agriculture-based enterprises.
The financing will be channelled through the bank’s offshore banking unit and is structured as an unsecured working capital facility. It initially carries a one-year tenor, with the possibility of two further annual renewals. Subject to the relevant conditions, the facility could therefore remain in place for up to three years.
A key feature of the agreement is the allocation of funds towards women-owned small and medium-sized enterprises. At least 50 per cent of the total facility, or the equivalent amount in local currency, is earmarked for businesses owned by women. A further minimum of 25 per cent will be directed towards agriculture-related small and medium-sized enterprises.
The targeted allocation is significant for businesses that often face difficulties in securing adequate working capital. Access to timely financing can help enterprises meet day-to-day operating expenses, purchase raw materials, maintain production and manage trade-related requirements without putting excessive pressure on their existing cash flows.
The facility is also expected to strengthen BRAC Bank’s capacity to provide financing in foreign currencies. Businesses involved in international trade may benefit from improved access to funds for importing capital machinery, raw materials and other goods required for their operations.
For companies dependent on imports or engaged in cross-border trade, foreign-currency financing can be particularly relevant as it allows them to meet certain business requirements in the currency in which their transactions are conducted. The new facility could therefore provide additional financing options for export-oriented and production-linked enterprises.
Tarik Refat Ullah Khan, Managing Director and Chief Executive Officer of BRAC Bank, said the investment reflected the international financial institution’s confidence in the bank’s financial strength, governance and experience in financing small and medium-sized businesses.
According to him, the new facility would widen access to finance for businesses that play an important role in Bangladesh’s economy. Women entrepreneurs, agriculture-based enterprises, and businesses involved in international trade and manufacturing would particularly benefit from access to foreign-currency financing, he said.
The latest facility marks the fourth consecutive financing arrangement provided to BRAC Bank by the international financial institution. The agreement builds on the two organisations’ longstanding partnership, with financial inclusion and private-sector development among the broader objectives of the collaboration.
The financing comes under the institution’s dedicated small and medium-sized enterprise fund, which operates through its SME financing platform. Such initiatives are designed to channel funding through financial institutions to businesses in developing economies that may have relatively limited access to conventional sources of finance.
MSMEs form an important part of Bangladesh’s economic landscape. They contribute to employment, local production, distribution networks and a wide range of commercial activities. Yet many smaller businesses continue to face barriers when seeking formal financing, including limited collateral, insufficient access to working capital and difficulties in obtaining foreign-currency funding.
These constraints can make it harder for entrepreneurs to increase production, enter new markets or invest in equipment and other business requirements. Women-owned enterprises and agriculture-related businesses may face particular financing challenges, making the dedicated allocations under the new facility especially relevant.
BRAC Bank said its extensive branch and service network would be used to help make financing available to entrepreneurs. The bank also plans to support businesses in connecting with regional and international supply chains.
The facility, therefore, has implications beyond the bank’s own lending capacity. By directing a substantial share of the financing towards women-owned enterprises and agriculture-based businesses while expanding foreign-currency lending capacity, it could help widen funding opportunities across several important segments of Bangladesh’s private sector.
For smaller businesses, access to appropriate working capital can be crucial to maintaining regular operations and responding to new commercial opportunities. The effectiveness of the new facility will ultimately depend on how efficiently the funds reach eligible enterprises and how effectively those businesses are able to use the financing for productive activities.
