Citi, OPIC and Bank Andara Support the Rapid Growth of the Microfinance Sector in Indonesia with $18.5 Million Term Loan Funding
October 2, 2012
(OPIC)
Citi Indonesia, the Overseas Private Investment Corporation (OPIC) and Bank
Andara announced the closing of a USD 18.5 million term loan to fund the growth
and strategy of Bank Andara’s Microfinance business, and to promote the
financial inclusion of micro entrepreneurs and small businesses in Indonesia.
This loan is the second one from Citi and OPIC for the microfinance sector in
Indonesia, and is a part of Citi’s and OPIC’s joint global initiative to support
microfinance lending in emerging markets worldwide.
OPIC President and CEO Elizabeth Littlefield said, “As a wholesaler to other
microfinance institutions, Bank Andara is a force multiplier for low-income
households and small entrepreneurs in rural Indonesia. We believe that Bank
Andara’s innovative use of technology is a powerful channel to provide financial
access to micro entrepreneurs and small business in Indonesia that lack basic
financial services. In addition, by supporting microfinance institutions in
Indonesia with treasury management services, Bank Andara will help these
institutions to better manage their business.
“The successful deployment of capital, banking services and technology will
serve to support the development of financial infrastructure of Indonesia, a
priority country for OPIC and the Obama Administration. We are extremely pleased
to team with Citi and Bank Andara in such a developmentally-rich initiative,”
she added.
Ms. Littlefield noted that OPIC provides capital to microfinance institutions
through investments in microfinance investment vehicles, targeted credit
facilities to individual microfinance institutions, risk sharing arrangements,
and guaranties supporting innovative industry efforts. OPIC has committed over
$650 million to microfinance projects, which have supported 125 MFIs in 36
countries.
“Indonesia is a developing country that is currently facing a rapid growth in
its microfinance sector which has a potential opportunity to grow its economy
even further as we know that there are still millions of small business that are
lacking of access to banks, financing or microfinance,” says Kunardy Lie, Head
of Global Banking Citi Indonesia. “This loan shows the continuation and
consistency of our commitment to Indonesia economy. Through Bank Andara, which
focuses on rural financial institutions, we are confident that it will come to a
progressive development that enables small businesses in Indonesia to grow
further,” he added.
David Yong, President Director Bank Andara, added ”This credit facility
agreement proves strong support and confidence from OPIC & Citi Indonesia
towards Bank Andara’s execution of its mission of Financial Inclusion through a
Wholesale FI model exclusively. By positioning itself as champion of micro
finance institutions in Indonesia Bank Andara possesses a unique business
model, which provides greater reach to technology and knowledge transfer, next
to financial services. We are increasingly seeking additional domestic funding
channels, including institutions, foundations and high-net worth individuals.
Our transactional banking platform, AndaraLink, has shown a healthy growth of
new joiners and now exceeds more than 300 micro-finance institutions and
growing. By end of June 2012, we have already completed another credit facility
from a domestic banking institution and also obtained additional capital from
shareholders. The Bank has demonstrated it growth trajectory through total
assets which expected to be close to IDR 1 trillion by end of July 2012.
Virtually most of the funding will be utilized to increase our lending
disbursements to micro finance institutions, in line with our strategic focus.
We have the systems and tools in place to differentiate the risk profiles of the
various micro-finance institutions and our portfolio is sufficiently granular
both in terms of geography and clients. We believe Bank Andara’s unique business
& focus will strengthen us as the trusted business partner of Indonesia’s
micro finance institutions”.
“While the microfinance sector in Indonesia is one of the largest in the world,
the World Bank estimates that only 9 pct of adults in Indonesia accessed a loan
from a formal institution last year. Moreover, as less than 50 percent of its
population currently does not have access to the financial system, Bank Andara
is uniquely focused on providing microfinance institutions and rural banks with
access to funding and innovative products technology and training, so that they
can serve greater numbers of clients and having grater reach than traditional
players. We are pleased to be working with our partners OPIC and Bank Andara to
expand financial inclusion in Indonesia,' said Bob Annibale, Citi’s Global
Director of Microfinance.”
Citi’s strong commitment to promote financial inclusion through innovation,
thought leadership and building clients financial capability is very well
recognized. Citi was awarded the top prize in the International Award category
at the Business in the Community’s Awards for Excellence 2012 for “Scaling
Microfinance to Achieve Financial Inclusion,” a case study of Citi’s $350
million partnership with OPIC to develop new distribution models to access
microentrepreneurs in developing markets.
About Citi
Citi, the leading global bank, has approximately 200 million customer accounts
and does business in more than 160 countries and jurisdictions. Citi provides
consumers, corporations, governments and institutions with a broad range of
financial products and services, including consumer banking and credit,
corporate and investment banking, securities brokerage, transaction services,
and wealth management.
About Citi Microfinance
Working across Citi’s businesses, product groups and geographies, Citi
Microfinance serves more than 100 microfinance institutions (MFIs), networks and
investors as clients and partners in over 40 countries with products and
services spanning the financial spectrum – from financing, access to capital
markets, transaction services and hedging foreign exchange risk, to credit,
savings, remittances and insurance products - to expand access to financial
services for the underserved. www.citi.com/citi/microfinance
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