LANDBANK’s ‘iTRAIN’: Nurturing Cooperatives for Countryside Development
Over the years, cooperatives have played an important role in the growth and development of the Philippine countryside and the need to capacitate them is essential to ensure their sustainability and competitive advantage.
In light of this, the Landbank of the Philippines (LANDBANK) has developed the “Innovative Training and Responsive Approaches for Institutional Nurturing (iTRAIN)” to support the Bank’s desire to promote innovation, establish resiliency, encourage collaboration and cultivate a culture of continuous learning.
Under the iTRAIN, Bank-assisted cooperatives have to undergo an annual operations review (OR) using the’ Cooperative Operations Review Instrument’ (CORI) developed by the Bank. The CORI enables the Bank to identify the type of capability building intervention needed by cooperatives to address their weaknesses. CORI was designed as a risk-based rating document that stimulates the capabilities and training needs of cooperatives under the following key result areas: control environment, risk assessment, control activities, cashiering, bookkeeping and other security measures, business operations, sundries, information and communication and monitoring. For cooperatives that pass the CORI, the schedule of Operations Review (OR) is every 2 years while those that are rated “Acceptable” should at least go through OR in the subsequent year.
Another innovation tied to the OR is the ‘Enhanced Cooperative Accreditation Criteria’ (CAC) which measures the financial and operational readiness in availing the Bank’s financial support. Cooperatives that fall under the less (weak) operationally-matured bracket – Class C and Class D – are prioritized.
Alongside the training of its partner-cooperatives, LANDBANK also hones the skills and competencies of account officers and account assistants tasked to perform activities associated with the categorization and the operations review of cooperatives. Highly-trained lending officers make LANDBANK’s clients feel the value of relevant and responsive customer service delivery.
LANDBANK’s ‘iTRAIN’ program won the ADFIAP Outstanding Development Project Award 2015 under the Human Capital Development Category.
DBJ: Greening the Bond Market
The Development Bank of Japan, Inc. (DBJ) issued its inaugural Euro 250 million green bond in October 2014 with a maturity of 3 years. This was the first green bond in the Euro market issued by a Japanese issuer. Those that jointly acted as lead managers for the transaction were Merrill Lynch International, Morgan Stanley & Co. International plc, Citigroup Global Market Limited and Daiwa Capital Markets Europe. The bond paid an annual coupon of 0.25% per annum and the total amount of the Eligible Assets for the Green Bond is ¥49 billion (approx. €346 million).
Green bonds are created to raise capital for new and existing projects with environmental and social benefits. DBJ green bond are recourse-to-the-issuer debt obligation for which the proceeds shall be tracked by DBJ and attested to by a formal internal process that will be linked to DBJ’s lending operations for the projects. The net proceeds of the issuance of the notes will be used to finance the Eligible Assets. Eligible Assets means new loans and/or existing loans under management by the DBJ which finance a building/development receiving a DBJ Green Building Certification of at least 3 stars out of 5 stars.
The ‘DBJ Green Bond’ won the ADFIAP Outstanding Development Project Award 2015 under the Environmental Development Category.
CGC Malaysia’s Wholesale Guarantee Scheme: Supplementing SMEs’ Access to Finance
The Credit Guarantee Corporation (CGC) Malaysia Berhad and the OCBC Al-Amin Bank in April 2014 launched the first ever ‘Islamic Wholesale Guarantee’ (WG-i) valued at RM 250 million (USD 69 million). This augurs well for the development of the unsecured SME financing business in Malaysia and is best suited for capital improvement and investment needs such as machinery and raw materials, and to support business growth where additional working capital is required.
The innovation of WG-I aims to capture the participation of other financial institutions by providing capital relief in accordance with Basel II while, at the same time, allowing them to obtain additional security to unsecured or partially-secured SME loans. WG-i also provides a new edge for the banking industry by reducing risk on books of financial institutions and freeing up capital to allow increased capacity for more SME financing.
In addition, the strength of WG-i lies in its simple implementation method of providing blanket guarantee on loans already underwritten by the participating financial institution via a thorough understanding on the underwriting standards and performance of such loans. As the portfolio would have been seasoned for a period of time, loan quality is made more predictive, hence no further credit assessment is required upon submission. The financial institution only needs to submit the qualifying accounts per the agreed terms. WG-i also allows better certainty in outreach and fee income as this is derived from a pool of existing customers in the financial institution’s books. The WG-i program has already reached out to a total of 2,297 SMEs since it was launched. CGC and Al-Amin Bank are expecting the demand for wholesale guarantee to increase this year.
The ‘WG-I’ program won the 2015 ADFIAP Outstanding Development Project Awards under the SME Development Category.
VDB’s Expressway Financing: Connecting Cities, Modernizing the Economy
A sustainable economy requires a strong and modern infrastructure system for socio-economic development. A synchronous transport network, especially the expressway system, plays a vital role in the course of national industrialization and modernization.
The Vietnam Development Bank (VDB) has recently financed the construction of the ‘Hanoi-Hai Phong Expressway’ project, the biggest development infrastructure project that VDB has financed recently.
This project will connect capital Hanoi City with Hai Phong City which serves as the primary seaport for the northern region of the country. This expressway is a Class A road system with a design speed of 120kph, 6 travel lanes and 2 emergency lanes with a length of 105.5 kms., passing through 4 cities and provinces, namely, Hanoi, Hung Yen, Hai Duong and Hai Phong. The project is expected to spread through the key economic zones of the North and provinces in the Red River Delta and promote the development of all the localities in the region and neighboring areas.
In addition, the development of the expressway is part of the planning of the “Two Corridors, One Belt” cooperation between Vietnam and China which plays a significant role in supporting and attracting investment and the import and export of goods. The development investment will bring into full play efficiency of other infrastructure projects such as seaports, airports, and tourism hubs.
The ‘Hanoi-Hai Phong Expressway’ project of the VDB won the 2015 ADFIAP Development Project Award under Infrastructure Development category.
SIDBI’s ‘smallB.in’: Providing Opportunities for Entrepreneurship
The promotion of entrepreneurship is increasingly being recognized as an important means of unleashing the productive and innovative potential of the youth and is considered as one of the primary sources of job creation, economic competitiveness and prosperity.
The Small Industries Development Bank of India (SIDBI), being the principal financial institution for the promotion, financing and development of the MSME sector in India, has developed and hosted a website, www.smallB.in that serves as a virtual mentor and handholding forum for potential, budding and even existing entrepreneurs.
The website is quite exhaustive, covering various aspects such as scouting for business opportunities, understanding various forms of business organization, learning basic legal aspects, business plan preparation, understanding various requirements for obtaining credit from banks and financial institutions, knowing policies of regulations, schemes and incentives offered by the central states and governments.
Other benefits of the website include unraveling the process of identification of business opportunities, generate ideas and learn from some of the most successful start-ups in the world, find links and resources for franchise opportunities available in India, access technologies from ITs and other premier institutions for commercialization, discover the essential steps involved in incorporating a new business in India.
It also features the key steps, regulations and procedures involved in setting up of a new enterprise, easily access policy measures, schemes and incentives offered by the central and state governments, features the various sources of finance, how to capitalize a business, how to prepare a detailed project report for a bank or financial institution, how to access collateral-free loans from banks, and also give an overview of venture capitalists in India and how to approach them.
The website has had around 5 million hits since its launch and a rating of 4.30 rating on a 5-star rating poll. The website is SIDBI’s attempt to inspire all individuals to look at the business opportunities all around and to demystify and simplify the process of starting a business in India.
SIDBI’s ‘smallB.in’ won the 2015 ADFIAP Outstanding Development Award under the Technology Development category.
“Project Export Finance Facility”: Exim India’s Holistic Approach to Trade Facilitation & Finance
As the premier institution for India’s international trade, Export-Import Bank of India’s (Exim Bank) heart is close to exporters. This is manifested through its “Project Export Finance Facility” that aims to provide Indian companies with not only a comprehensive range of financing options including loans and guarantees, but also information, advisory and support services at all stages of the project cycle.
This initiative played a significant role in catalyzing India’s project exports in 2014 and enhanced the international competitiveness of Indian exporters. It also enabled the Indian exporters to take advantage of the growing project export opportunities, especially those funded by multilateral development banks where such projects also enabled host countries to implement developmental and infrastructure projects.
With Exim Bank India’s ‘Project Export Finance Facility’, Indian companies made an impressive growth in 2014 in a number of areas like civil construction projects, turnkey projects and technical services. Also with the support of Exim Bank, project export contracts valued more than US$3.5 billion were secured by Indian companies during the FY 2014-1015. And at the end of December 2014, 374 project export contracts valued at approximately USD 27 billion supported by Exim Bank were under execution in 78 countries across Asia, Africa, and the CIS by 112 Indian companies.
The ‘Project Export Finance initiative’ of the Export-Import Bank of India won the 2015 ADFIAP Outstanding Development Project Award under the Trade Development Category.
DBP’s Water Financing Project: An Integral Part of Local Economic Development
The scarcity of water is becoming a global problem that needs to be addressed. This problem was recognized by the Development Bank of the Philippines (DBP) and it co-financed the Php 1.073 billion “35 million liters per day (MLD) Cebu Bulk Water Project-Sustaining Local Economic Development” together with the Cebu Manila Water Development Inc. (CMWDI), a joint investment company between Manila Water Consortium (MWC) and the Provincial Government of Cebu (PGC).
This project was conceived to answer the growing demand for water in Metro Cebu as it continues to become a progressive province. This project is expected to augment the Metro Cebu Water District’s (MCWD) water supply and provide clean and potable water to an estimated 187, 380 service connections equivalent to a population of about 1,583, 636 until year 2027. The project will offer MCWD an alternative source of water to groundwater given the cases of saltwater intrusion discovered in the study conducted in 2004. The bulk water supply project will augment MCWD’s existing water source to serve the increasing number of population and commercial and industrial activities where the end result is sustained local economic development.
At the same time, the project will help minimize ground water extraction to protect the environment. The tourism industry as well as other industries which are sources of livelihood to so many people that provides revenue for different stakeholders will continue to bloom and grow.
This project is a new model for public-private partnership (PPP) for bulk water supply initiatives for local economic development. CMWDI is 51% owned by MWC, a private company, and 49% owned by the PCG, a government entity. The project follows a design-build-finance-operation scheme wherein the off-taker for the 35 MLD bulk water is MWCD, a government-owned and controlled corporation, under a water purchase agreement.
The project is funded by an Official Development Assistance (ODA) fund, the Philippine Water Revolving Fund (PWRF), under its mode 4 mechanism or the Private Sector Participation via Direct Equity. DBP is conduit bank of the JICA-funded Environmental Development Project which covers among others, the PWRF which on-lends fund to eligible borrowers. DBP funded about 75% of the PhP 1.073 Billion investment while the CMWDI infused an equity portion amounting to PhP 273 million.
The ‘35 MLD Cebu Bulk Water Project-Sustaining Local Economic Development Project’ won the 2015 ADFIAP Outstanding Development Project Award, under Local Economic Development category.
SIDBI’s Financial Inclusion Program covers ‘Poorest of the Poor’
Providing financial services to the poorest of the poor will help them uplift their standard of living and become part of an economic growth. The Small Industries Development Bank of India (SIDBI) is implementing the ‘Poorest State Inclusive Growth (PSIG)’ programme funded by the U.K.’s Department for International Development (DFID).
The programme aims to enhance the income and employment opportunities of poor women and men in 8 low-income States by enabling them to participate and benefit from wider economic growth in India. The purpose of the programme is to improve income and reduce vulnerability of poor people and small producers by expanding their access to finance and markets.
There are 2 components of the programme. Component 1 – Financial inclusion and women’s empowerment (duration of 6 years) shall improve access for poor men and women to a variety of financial services in the 4 low-income states (Bihar, Orissa, Madhya Pradesh and Uttar Pradesh ) and will: (a) facilitate financial services institutions, including banks and microfinance institutions (MFIs) to provide services for poor people in geographical areas to which they would not otherwise go by providing patient capital, guarantees or technical assistance, as appropriate (b) supplement microfinance programmes with training for women to improve their knowledge and confidence in financial services (c) facilitate studies, set up high level think tanks and feed into improving the policy environment for microfinance and improving overall business environment in the low-income states and (d) fund commercially sustainable approaches that demonstrate responsible client practices and complement Government of India programmes.
Component 2 – Impact investments: The programme funds will be spent on promoting businesses that increase the income of, or services to, the poor in 8 low-income Indian states (Bihar, Orissa, Madhya Pradesh, Uttar Pradesh, Chhattisgarh, Jharkhand, Rajasthan and West Bengal). The programme funds will provide capital or guarantees to businesses which have the potential to benefit poor people but which do not attract private capital even though they are judged to be financially viable. The investments will be judged on social and environmental performance in addition to financial risk and return, and will be in the form of debt, equity, venture capital and guarantees. The programme’s investments in enterprises in the 8 poorest states will result in better opportunities for the poor to benefit as producers, consumers or skill providers.
The PSIG is expected to leverage private sector financial and technical resources to reach up to 12 million direct and indirect programme participants in 4 states of UP, MP, Bihar and Odisha. The programme duration is 6 years starting from April 2012-March 2018, extendable up to 1 year to March 2019.
SIDBI’s ‘Poorest States Inclusive Growth Progamme’ won the 2015 ADFIAP Outstanding Development Project Awards under the Financial Inclusion category.
DBP’s ‘Good Governance Program’: A Key Component for Institution Building & Development Performance
In 2012, the Development Bank of the Philippines (DBP) upgraded to the next level its existing good governance system and has approved a holistic ‘DBP Good Governance Program’ (GGP), an umbrella framework to reinforce core ethical values critical to corporate governance – integrity, excellence, teamwork, service to others, and love for Filipino – values that dictate how the Bank deals with its stakeholders, including the National Government, clients, subsidiaries, regulatory agencies and its own officials and employees.
To ensure bank-wide implementation of the GGP, the DBP Board of Directors created a dedicated department – the Corporate Governance Office (CGO) – the first of its kind in all Government-owned or Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs) in the entire Philippine Government. It is headed by the Chief Governance Officer who oversees and coordinates implementation of the GGP and the overall compliance of the Bank with the Governance Commission for GOCCs (CGC) rules and issuances, acts as the Bank’s Resident Ombudsman Coordinator, and has direct supervision over the Bank’s Administrative Discipline Unit.
For its good governance efforts, DBP holds the distinction of being the first GOCC to be initiated by the Institute of Corporate Directors (ICD) into the Performance Governance System (PGS) in 2012. Two years later, DBP achieved Compliant Status under the PGS that is administered by the Institute of Solidarity in Asia (ISA) which, along with sister institution, ICD, is the leading advocacy and accreditation agency for good governance in the public or government sector. The Bank holds the distinction of being the first GFI to reach this level.
The Bank also received the Silver Governance Trailblazer Award, one of the only four government agencies to have been awarded. The Bank is on track to be accredited as an ‘Island of Good Governance’, a project of the ISA to be presented during the APEC meeting in 2016. Through the PGS, the Bank has remained focused in financing projects in its core development mandates (infrastructure and social services with Local Government Units, electric cooperatives and water districts and financing of micro, small and medium enterprises) and, at the same time, delivered robust and sustainable revenue sources.
To ensure sustainability and implementation of the DBP’s strategy, the Bank has also institutionalized the PGS mechanism of a ‘Multi Sector Governance Coalition’ (MSGC) through the creation of DBP Advisory Council composed of high impact sectoral leaders. As a key player in the banking industry, DBP has set the bar higher in the advocacy and practice of good governance in its policies and all levels of banking operations. The performance of the Bank has proven that good governance pays, leading to a robust financial condition that allows the Bank to deepen and widen its developmental mandate.
The ‘DBP Good Governance Program’ won the 2015 ADFIAP Outstanding Development Project Award under the Corporate Governance Category.
Esquire Financing Inc.’s Social Responsibility Programs: Enhancing People and Community-centered Development
In its ‘CSR Campaign for 2014’, the Esquire Financing Inc. (EFI) has implemented various social responsibility projects that engaged EFI in the promotion of company values and in the enhancement of lives through learning and collaboration. These projects included sponsorship of the Gawad Kalinga Sibol School, Monthly Gawad Kalinga Art Workshops, Employee-initiated fundraising activities, and ‘Fueling the Dreams’ Model Competition.
The goal of the EIF’s CSR campaign for 2014 was to improve relationship with supported communities and to encourage employee community involvement. The projects under the CSR program allocated manpower and resources based on the themes of Education (initiation of or supporting projects that promote education and learning in various levels), Involvement (initiation of or active participation in campaigns or projects that support local communities), and Development (creating partnerships to promote opportunities for value exchange and development among internal and external stakeholders).
In addition, by 2019, EFI should be able to: (1) extend the company’s financial proficiency by supporting 100 non-governmental organizations, charities, microfinance institutions and social businesses (2) sponsor the wage of one teacher and learning materials of one classroom for 100 public schools for one academic year (3) facilitate 500 hours of financial literacy workshops to 100 elementary students who are inclined to pursue a career in finance (4) Increase the number of volunteering hours of employees in citizenship activities by 20% every year for the next five years (5) sponsor at least 5% of the basic financial needs of 50 orphanages and homes for the aged and (6) generate 250 jobs for the unemployed through tie-up livelihood programs and social businesses.
Through these various projects, EFI was able to support the yearly planning of teachers and monthly curricular activities alongside shouldering student’s tuition fees and schools’ utility expenses; raised more than Php 160,000 from employee-initiated fundraising activities; and achieved a total of 373 employee volunteering hours.
EFI’s ‘CSR Campaign Program’ won the 2015 ADFIAP Outstanding Development Project Award under the CSR category.