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Rationale
FIP
aims to transform the microfinance sector shifting from reliance
on subsidies to market based, sustainable and inclusive financial
services. In order to ensure that microfinance providers are
viewed as attractive investment opportunities, their systems
and human resource capabilities will be strengthened under
the Institutional Strengthening Fund (ISF). The fund’s
investment will ensure delivery of cost-effective and quality
financial services to the poor. Good corporate governance
and management will be implemented through a public-private
partnership.
Benefits
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Facilitate increased access to Microfinance Development
Services (MDS) and Business Development Services (BDS)
for micro and small enterprises by financing eligible
services including technical, managerial, financial, and
marketing capacity building and related assistance.
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Provide start-up capital through matching grants will
be provided to MFIs to adopt innovative approaches to
product diversification and growth
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Promote micro-insurance coverage for protection of assets
and livelihoods against insurable risks of microfinance
borrowers.
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Provide incentives to MFBs to develop savings products.
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Assist microfinance players in raising medium to long
term resources through commercial bank debts, syndication
arrangements or term finance certificates (TFCs) or bonds
would be for the government to facilitate access of MFBs
to partial credit guarantee scheme(s) such as credit enhancement
facility.
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Strengthen human resource base of the development finance
sector through training opportunities for front-line staff,
line managers and senior management of microfinance institutions,
Small Enterprises and commercial banks.
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