The International Finance Corporation (IFC) has announced that BRAC Bank, which specialises in the small- and medium-sized enterprise banking market in Bangladesh, has joined its Global Trade Finance Programme (GTFP).

The private sector arm of the World Bank Group says that BRAC Bank signing up to the GTFP means it will be able to increase its trade finance business and offer longer tenors and more competitive pricing to the smaller businesses that are its clients.

Emerging markets

The GTFP supports trade with emerging markets worldwide and promotes the flow of goods and services between developing countries, mainly through the provision of guarantees for letters of credit (L/Cs).

Through its guarantee coverage of bank risk in emerging markets, the programme participants should be able to expand their trade finance transactions within an extensive network of countries and banks and enhance their trade finance coverage.

The IFC issued the programme's first guarantee in September 2005. Since then, it has issued 500 guarantees in excess of $450 million (DC World News, 23 October 2006).

Bank benefits

By joining the programme, BRAC bank should accrue several benefits according to the IFC's Director for South Asia, Iyad Malas. "We hope that BRAC Bank will be able to expand its network of correspondent banks and create new and valuable business opportunities for its clients in Bangladesh," he says.

Sectors that are expected to benefit from BRAC bank's participation in GTFP include telecommunications, consumer goods, electronics, pharmaceuticals, and - through imports of machinery - the rapidly expanding textile sector.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.