Dutch development bank FMO is mulling a proposal to extend an unsecured senior loan of up to $20 million to Indonesian non-banking financing company Mitra Bisnis Keluarga Ventura (MBK), per a disclosure.
The loan facility will have a tenor of five years, FMO said.
“The funds will be utilised to finance the growth of the microfinance portfolio in rural areas,” it added.
Founded in 2003, MBK provides microfinance loans and working capital to low-income households in Indonesia. It is modelled after Bangladesh’s Grameen Bank that provides credit to the poor in rural areas without any collateral.
All of MBK’s more than 1.3 million clients and its field staff are women. The NBFC has to date disbursed loans worth over $260 million.
FMO said an amount of $15 million from its loan will be used to provide very small working capital, averaging $200 per client, to the bottom 25 per cent of the population in Indonesia by income.
The working capital, which will be offered to women only, is aimed at stimulating the development of small business.
The remaining $5 million will be allocated to Water, Sanitation and Hygiene (WASH) loans to contribute to the supply, storage and access to clean water, the collection, storage and transportation of human waste and hygiene practices to poor households in Indonesia.
MBK is a 99.7 per cent owned subsidiary of PT Bina Usaha Keluarga, which is in turned 20 per cent owned by the International Finance Corporation (IFC).
IFC made a $3 million equity investment in the firm in 2013, then committed $50 million in debt financing in 2017.
MBK was the first microfinance institution in Indonesia to be financed by FMO in 2012, the development bank said. It provided a $13.5 million loan to the firm in 2014, followed by a $15 million facility in 2017.
