The World Bank approved a US$8 million grant to help improve access to formal banking services in Afghanistan as well as strengthen Da Afghanistan Bank’s core function of banking supervision and regulation on April 30, 2009.
In 2002 after the fall of the Taliban regime, the formal financial sector in Afghanistan was almost inoperative and the legal framework was virtually non-existent. Since then, Afghanistan’s financial sector has gone through two phases of development. During the first phase (2002-04), a basic legal and institutional framework for a modern financial sector was introduced, which laid the foundation for the re-establishment of Da Afghanistan Bank (DAB) as the central bank with autonomous regulatory authority to implement monetary policy and banking regulation and supervision.
In the second phase (2005-present), formal financial services emerged and a number of private commercial banks were established. Currently, there are 17 commercial banks operating in Afghanistan, which include 2 state-owned commercial banks, 10 private commercial banks, and 5 branches of foreign commercial banks. Despite these achievements, a weak financial sector still remains one of the major binding constraints to private sector development in Afghanistan.
The Financial Sector Strengthening Project supports Afghanistan National Development Strategy’s vision to establish a modern and competitive financial sector. The project will specifically strengthen the capacity of Da Afghanistan Bank (DAB) in the areas of banking supervision, accounting, internal audit, and human resource management. It will also develop necessary financial infrastructure such as public credit registry, collateral registry and Afghanistan Institution of Banking.
"The legal and regulatory framework of Afghanistan’s financial sector has improved significantly. But many challenges remain, notably increasing access to financial services as well as ensuring sustainability of the sector,” said Md. Reazul Islam, World Bank Senior Private Sector Development Specialist and Project Team Leader. “To overcome these challenges, the government needs to enforce implementation of rules and regulation. The World Bank remains committed to provide technical as well as financial resources necessary to build a sustainable and accountable financial sector in Afghanistan.”
The project also supports some of the key areas that have been agreed by the Government of Afghanistan and its development partners at the Enabling Environment Conference Road Map in 2007.
The total cost of the project is estimated around US$9.46 million. In addition to IDA’s US$8 million grant, International Financial Corporation, the private sector arm of the World Bank Group, has provided US$0.59 million in technical support. Some US$0.87 million have been contributed through counter funding by Da Afghanistan Bank, Afghanistan Bank’s Association and Microfinance Investment Support Facility for Afghanistan (MISFA).
For more information on the Bank’s work in Afghanistan, please visit: http://www.worldbank.org.af
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Friday, May 1, 2009
World Bank Provides More Support to India’s Small and Medium Enterprises
The World Bank approved a US$400 million additional financing loan to the Small Industries Development Bank of India (SIDBI) on April 30, 2009, designed to improve access to finance for Small and Medium Enterprises (SMEs). This additional financing will help scale up the fully disbursed original project which had been approved by the World Bank on November 30, 2004.
Access to adequate and timely financing on competitive terms, particularly longer tenure loans remains a challenge for Indian SMEs. This problem has been exacerbated by the current global financial crisis, the ensuing liquidity constraints and the slowdown in credit growth in the Indian financial sector. In particular, credit growth to SMEs has declined over the last year, which has held back the growth of SMEs and impacted overall growth and development.
"This Project is part of a larger program of support in response to the Government of India request for funding in light of the financial crisis. It is targeted particularly at SMEs, to help address the credit slowdown that has resulted from the financial crisis,” said Roberto Zagha, World Bank Country Director for India. “Achieving and sustaining growth and employment will require a sharp step up in industrial and services growth. This needs to be spurred by SMEs which have the greatest potential to provide employment.”
The credit facility supported by the Project will channel long-term and working capital loans for SMEs in geographical areas beyond those that were covered in the original Project. This includes expanding to new geographical areas, possibly to India’s low-growth states, thereby promoting inclusive growth.
Under the credit facility SIDBI will also explore refinancing other banks and financial institutions for on-lending to SMEs. In addition, this Project will build linkages with an on-going DFID financed technical assistance component which is helping banks enhance the quality of their SME loan portfolios, strengthening business development services and building market linkage programs. “This integrated Project will help SMEs improve their profitability and competitiveness, and become more creditworthy,” said Niraj Verma, World Bank Senior Financial Sector Specialist and project team leader.
Finally, the Risk Sharing Facility supported by the Project will expand the coverage of this innovative initiative launched under the parent Project.
The lending from the original project has covered 927 SMEs spread across 10 Indian states. A survey showed that nearly two-thirds of the SMEs financed upgraded their technology, which helped increase productivity.
The loan, from the International Bank for Reconstruction and Development (IBRD), is backed by a Republic of India guarantee. It has a 15 year maturity which includes a 5-year grace period.
For more information on the Bank’s work in India, visit http://www.worldbank.org.in
Access to adequate and timely financing on competitive terms, particularly longer tenure loans remains a challenge for Indian SMEs. This problem has been exacerbated by the current global financial crisis, the ensuing liquidity constraints and the slowdown in credit growth in the Indian financial sector. In particular, credit growth to SMEs has declined over the last year, which has held back the growth of SMEs and impacted overall growth and development.
"This Project is part of a larger program of support in response to the Government of India request for funding in light of the financial crisis. It is targeted particularly at SMEs, to help address the credit slowdown that has resulted from the financial crisis,” said Roberto Zagha, World Bank Country Director for India. “Achieving and sustaining growth and employment will require a sharp step up in industrial and services growth. This needs to be spurred by SMEs which have the greatest potential to provide employment.”
The credit facility supported by the Project will channel long-term and working capital loans for SMEs in geographical areas beyond those that were covered in the original Project. This includes expanding to new geographical areas, possibly to India’s low-growth states, thereby promoting inclusive growth.
Under the credit facility SIDBI will also explore refinancing other banks and financial institutions for on-lending to SMEs. In addition, this Project will build linkages with an on-going DFID financed technical assistance component which is helping banks enhance the quality of their SME loan portfolios, strengthening business development services and building market linkage programs. “This integrated Project will help SMEs improve their profitability and competitiveness, and become more creditworthy,” said Niraj Verma, World Bank Senior Financial Sector Specialist and project team leader.
Finally, the Risk Sharing Facility supported by the Project will expand the coverage of this innovative initiative launched under the parent Project.
The lending from the original project has covered 927 SMEs spread across 10 Indian states. A survey showed that nearly two-thirds of the SMEs financed upgraded their technology, which helped increase productivity.
The loan, from the International Bank for Reconstruction and Development (IBRD), is backed by a Republic of India guarantee. It has a 15 year maturity which includes a 5-year grace period.
For more information on the Bank’s work in India, visit http://www.worldbank.org.in
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