1. ADB
Financial Intermediation Lending
ADFIAP 6th International Forum
for
Chief Executives of
Development Finance Institutions
29 October 2009
by
Dr. Claudia Buentjen
Philippines Country Office
Asian Development Bank

2. Financial Intermediation Lending
(FIL)
To finance specific development projects
whose individual financing requirements are
not large enough to warrant direct
supervision of ADB (ADB Charter)

3. Key Modalities
ADB funds are on-lent to final borrowers
by eligible participating Financial
Intermediaries (FIs) at the FI’s credit risk
(credit lines to individual FIs)
ADB funds are on-lent to apex financial
institutions which make funds available to
participating FIs, including commercial
banks (development finance loans)

4. Objectives of Public Sector
Credit Lines
expand access to credit for sectors and
groups of borrowers that would otherwise
be excluded from borrowing
enable new technologies, expand access
to infrastructure, help create employment
strengthen the capacity, governance, and
sustainability of participating FIs

5. Volume of ADB Lending for
Public Sector Credit Lines
Volume of lending (in million US $)
1968–1990 1991–2007 1968–2007
Credit Lines 3,498.6 (11.3%) 1,075.0 (1.2%) 4,573.6 (3.8%)
Total public 31,075.4 88,947.4 120,002.8
sector lending
Downward trend since the early 90s

6. Success Factors of Public Sector
Credit Lines
stable macroeconomic conditions
solid management capacities of FIs
stronger financial sectors, including
competition policies
good legal and regulatory regimes for
financial institutions
mostly market-determined interest rates

7. Safeguard Policy
New Provisions for FIs
Dab's new safeguard policy statement
June 2009) replaces the
Involuntary Resettlement Policy (1995)
Policy on Indigenous People (1998)
Environmental Policy (2002)
includes special provisions for FIs to
ensure that ADB’s safeguard standards
are met

8. Safeguard Policy, cont.
ADB assesses
the potential of environmental and social
impacts and risks associated with the FI’s
existing and likely future portfolio
FIs commitment and capacity in social and
environmental management
If social or environmental risks are
identified, FIs will have to document and
agree with ADB an environmental and
social management system (ESMS) and
submit periodic reports to ADB

9. Safeguard Statement, cont.
FIs will apply the prohibited investment
activities list to subprojects financed by
ADB and ensure that their investments
are in compliance with applicable national
laws and regulations
For subprojects with significant
environmental or social impacts FIs will
refer these subprojects to ADB early. ADB
will assist the FI with the appraisal for
these subprojects.

10. Recent Trends
use of other modalities such as program-
based lending to strengthen industrial and
financial sectors
limit use of credit lines for countries that
have acute shortages of long-term
resources for funding investment
use credit lines solely on the provision of
long-term local currency resources
preferably to the private sector

11. Thank you
www.adb.org/philippines/
To register for our e-newsletter,
and other information on the
ADB-Philippines partnership