Myanmar-headquartered microfinance institution Proximity Finance has signed a $3.28-million back-to-back funding agreement with Myanmar’s largest commercial lender Yoma Bank to support micro-lending for smallholder farmers.
Yoma Bank’s financing will go towards offering a low-interest loan for around 12,800 families. The bank first introduced its back-to-back loan scheme to Proximity Finance in mid-2017.
Yoma Bank’s back-to-back financing scheme, which comes with three-year tenor, is semi-collateralized with USD provided by social impact investor MCE Social Capital.
“This back-to-back structure of funding will allow more investment into Myanmar in hard currency while allowing MFIs to repay in local currency. This deal with Yoma Bank should continue to be an example for other local banks,” Proximity Finance chief executive Hedvig Sundberg said in a statement.
Proximity Finance is one of the largest MFIs in Myanmar with over 100,000 end customers and a portfolio of over $20 million. It offers crop loan, small business loan, livestock loan, and on-the-go loan.
The company expects its number of customers to touch 200,000 in the next five years.
Yoma Bank, one of the largest lenders in Myanmar, partnered with Telenor, Myanmar’s largest telco firm, to develop a mobile wallet payment platform called Wave Money in 2015.
In April this year, Yoma Bank provided $1.46 million support to Mahar Bawga Finance Company Limited.