Habib Bank Limited has borrowed a loan of $150 million from International Finance Corporation (IFC) as part of its plan for domestic and international growth including improving financial inclusion and strengthening of private sector through empowering SMEs, women entrepreneurship and rural communities.
According to available details, under the terms, the principal amount will be payable in six equal half yearly installments from June 2022 to December 2024. The interest rate was set at LIBOR+5% is payable bi-annually from June 2015.
The loans are considered as instrumental for HBL in streamlining its operations domestically. It may be recalled that HBL faced a crisis situation with its New York branch, leading the bank to shut down the profitable branch and pay a heavy penalty of $225 million.
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector, previously gave a loan of $50 million to HBL back in 2009 which it repaid with the successful expansion of its operations and business in the post-privatization period.
These loans are expected to help HBL launch programs to increase the number of women depositors, as well as lending to agricultural and rural borrowers. Its engagement will support the bank’s growth in rural and agricultural financing, especially in reaching out to women depositors and women-run businesses. Also, the objective of the loan program is to support SMEs and create jobs in various parts of the country.
It is believed that a significant number of its small and medium enterprises remain outside formal channels and face challenges accessing financing in Pakistan. Fewer than 7 percent have taken out a bank loan, and at least a third has no banking relationship at all.
It is pertinent to mention here that HBL recorded a massive drop of 48 percent in its half-yearly profit in 2018. Low interest rates and issues related to the closure of its NY Branch are being cited as reasons that led to a massive decline in profitability for the bank.