The International Finance Corporation (IFC) says it plans to invest at least US$8 million in Bangladesh's banking sector through its Global Trade Finance Programme (GTFP), which centres on providing guarantees for letters of credit (L/Cs).

According to local media reports, the IFC will invest US$3 million in BRAC Bank (DC World News, 22 November 2006) and US$5 million in the Southeast Bank.

Bank risk

The programme, which began operations in September 2005, is aimed at supporting trade with emerging markets worldwide and promoting flows of goods and services between developing countries.

In the GTFP, the IFC provides guarantees covering bank risk related to underlying trade transactions, most of which are L/C based, for up to three years.

More banks

According to local media in Bangladesh, The Eastern Bank may also be preparing to sign up to GTFP.

The Dhaka Bank in Bangladesh is already signed up to the GTFP.

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