City Bank gets IFC’s funds for Covid-19-hit SMEs’ trade financing

The International Finance Corporation (IFC), a member of the World Bank Group, is providing funds to The City Bank, up to $30 million, to provide financing for small and medium enterprises as well as corporate companies affected by the Covid-19 pandemic.

This financing package will support working capital, trade finance and foreign exchange liquidity needs of sub-borrowers through The City Bank's offshore banking unit.

Sheikh Mohammad Maroof, additional managing director (AMD) of The City Bank told The Business Standard, "The fund will help to increase the foreign currency liquidity of the bank."

"Business entities which require short-term foreign currency financing – either as trade finance or as short term loans – due to their cash flow mismatch because of the pandemic will benefit from this facility," he added.

Business entities can manage their cash flow mismatch through this facility at a competitive rate, according to The City Bank AMD.

The financing package is part of the IFC's $8 billion global Covid-19 fast-track financing facility, which aims to help companies stay in business.

This investment comes under the Working Capital Solutions (WCS) program of the Covid-19 response envelope, which provides $2 billion globally to emerging-market banks. This allows them to extend credit so firms can cover expenses and pay their employees.

Sheikh Mohammad Maroof said "The IFC played a vital role in strengthening the foreign currency financing ability and offshore banking business of The City Bank."

"We believe that the Covid-19 WCS fund has further strengthened our ability to meet our customers' foreign currency financing requirements in this pandemic – where we have experienced contraction in foreign currency liquidity outside Bangladesh," he added.

Since 2017, the IFC has been a shareholder of The City Bank, a leading private commercial bank in the country and a long-standing client of IFC.

Wendy Werner, IFC country manager for Bangladesh, Bhutan and Nepal, said, "Our experience from past crises has shown that keeping small and medium enterprises solvent is vital to saving jobs and limiting economic damage."

She further said, "Through the IFC's fast-track Covid-19 facility, we hope to support The City Bank to lend to businesses whose cash flows have been disrupted by the global outbreak."

On June 30 this year, Sheikh Mahammad Maroof, AMD of The City Bank and Nuzhat Anwar, IFC senior country officer in Bangladesh, signed the agreement on behalf of their respective organisations.