ADB, VPBank sign $500 mln social loan package for women-owned SMEs in Vietnam

The Asian Development Bank (ADB) and VPBank signed Friday a loan package of up to $500 million to expand access to finance for women-owned small and medium-sized enterprises (WSMEs) and social loan projects in Vietnam.

The financing comprises a $100 million loan from ADB’s ordinary capital resources that will be dedicated to WSME financing and a $300 million syndicated parallel loan, with $100 million from the Sumitomo Mitsui Banking Corporation (SMBC), $100 million from ANZ, and $100 million from Maybank Securities Pte. Ltd.

The financial package also includes a $100 million facility that was co-financed by Japan International Cooperation Agency (JICA) and SMBC and signed in October 2021.

The parallel loans were jointly mobilized by ADB and SMBC, who were also joint mandated lead arrangers and bookrunners for the JICA facility.

The parallel loans will be used to support micro, small, and medium-sized enterprises (MSMEs) and social loan projects. Social loans finance activities and projects that address social issues or achieve positive social outcomes.

Eligible projects can include loans to MSMEs and WSMEs, support for public and private healthcare products and services, development of public and private educational infrastructure facilities, and support for affordable housing.

“Covid-19 has severely affected many businesses, so improving their access to finance is a vital step to post-pandemic recovery, particularly for women-run businesses which face greater difficulties in accessing capital,” said ADB vice president for private sector operations and public-private partnerships Ashok Lavasa.

SMEs account for 40% of Vietnam’s GDP and half of all employment. Access to commercial finance is a challenge, particularly for women borrowers who often face constraints such as lack of collateral, low financial literacy, higher risk perception by banks, and limited awareness among banks of the potential of the women’s market.

The financial package will help VPBank design new products and procedures to enhance its support to WSMEs.

A $750,000 performance-based grant funded by the Women Entrepreneurs Finance Initiative (We-Fi) will incentivize VPBank to expand its services to female borrowers and undertake a first-of-its-kind randomized control trial study in Vietnam on financial inclusion for WSMEs.

“These funds will help VPBank promote lending programs for SMEs, WSMEs, and other companies providing services such as health care, education, sanitation, and transport, by giving them access to relatively low-cost capital,” said VPBank CEO Nguyen Duc Vinh.

VPBank is a leading joint stock bank in Vietnam with robust digital platforms that help meet the needs of its retail and SME customers using innovative and customized products.