The Asian Development Bank (ADB) and Vietnam Prosperity Joint Stock Commercial Bank (VPB) have signed a loan package of up to $500 million to expand financial access to 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, ADB detailed in its announcement on Friday.
The loan amount also includes a $300-million syndicated parallel loan, with $100 million from the Sumitomo Mitsui Banking Corporation (SMBC), $100 million from the Australia and New Zealand Banking Group (ANZ), and $100 million from Maybank Securities.
The financial package further 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 mobilised by ADB and SMBC, which were also joint mandated lead arrangers and book runners for the JICA facility. They will be used to support micro, small, and medium-sized enterprises (MSMEs) and social loan projects.
Social loans fund 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.
SMEs account for 40% of Vietnam’s gross domestic product and half of all employments. However, they often encounter challenges accessing commercial finance, particularly for women borrowers who have constraints such as lack of collateral, low financial literacy, higher risk perception by banks, and limited awareness among banks about their potential market.
The financial package will help VPB design new products and procedures to enhance its support to WSMEs. A $750,000 performance-based grant funded by We-Fi will incentivise VPB to expand its services to female borrowers and undertake a first-of-its-kind randomised control trial study in Vietnam on financial inclusion for WSMEs.
VPB 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 customised products.