GXBank’s MSME financing push could receive a boost from a proposed risk-sharing facility from the International Finance Corporation (IFC), according to a DealStreetAsia report.
The facility could support up to about US$110 million in loans to MSMEs, based on an IFC project disclosure cited by the report.
The proposed unfunded guarantee would apply to the first-loss portion of the loan portfolio.
IFC and GXBank would share the risk on a 90:10 basis, while IFC’s exposure would be capped at up to US$4.95 million in Malaysian ringgit equivalent.
The arrangement is intended to help GXBank lend to MSME borrowers who may have limited access to formal financing.
This includes women-owned businesses and self-employed individuals seeking business loans.
IFC expects the guarantee structure to give GXBank added protection as it grows its MSME portfolio in borrower segments that may carry higher perceived risk.
GXBank received approval from the Minister of Finance and Bank Negara Malaysia to commence operations on 1 September 2023, making it the first of Malaysia’s five digital bank licence applicants to do so.
The Grab-led digital bank currently offers digital business accounts and Biz FlexiLoan for micro SMEs, with financing of up to RM150,000 subject to eligibility.
IFC is also expected to provide GXBank with training on the risk-sharing product, including onboarding and reporting requirements.
The proposed transaction will include work to improve GXBank’s environmental and social standards.
Featured image: Edited by Fintech News Malaysia, based on image by freepik via Magnific
