The Microcredit Regulatory Authority (MRA) has given BRAC, Bangladesh’s largest microcredit provider, permission to sell zero-coupon bonds worth Taka 1,350 crore through private placement.
The issuance of a zero coupon bond by a non-governmental organization is a first in Bangladesh’s microcredit history.
According to a news release today, MRA’s executive vice chairman, Md Fashiullah, handed over the much-anticipated permission letter to Tushar Bhowmik, BRAC’s chief financial officer, in a small-scale event held on MRA’s own premises on August 5.
The ceremony was also attended by MRA executive director Laxman Chandra Debnath, directors Muhammad Mazedul Haque and Md Nure Alom Mahadi, and BRAC associate director Ashit Baran Das.
The Bangladesh Securities and Exchange Commission (BSEC) had previously approved the issuing of these zero-coupon bonds for Taka 1,350 crore on February 3.
With a term ranging from one and a half to five years, the bond is unsecured, non-convertible, and fully redeemable.
This bond will be available for purchase with a multiple of Taka 10 million to institutional investors, corporations, and high net worth individuals. MTB Capital Limited serves as the issue’s trustee, and RSA Advisory Limited serves as the issue’s lead arranger.
BRAC Microfinance’s main sources of funding were client savings and bank borrowings. According to BRAC CFO Tushar Bhowmik, bond issuance is now an alternate source of funding for microcredit institutions.
The bonds, according to the CFO, will allow non-lender institutions to invest in BRAC’s microfinance program.
He expressed gratitude to all regulatory organizations for their collaboration along the road, saying that it is a tremendous acknowledgment for the microfinance sector.
BRAC anticipates that the bonds will aid in the more efficient improvement of the livelihoods of those who require inexpensive financial solutions, particularly in marginalized communities.
BRAC’s adventure began in 1972 in Sulla, Bangladesh’s northeast. For people living in poverty to break the pattern, they needed financial access.
BRAC made its first loans to fishermen in Sulla in 1974, after recognizing their need. BRAC’s microfinance program has provided financial services to 7.4 million people so far.