IFC Convertible Loan to Zhong An Credit Supports Microlending in China
Hong Kong, January, 22 2008 -
IFC, a member of the World Bank Group, today signed an agreement to support Zhong An Credit, a Cayman Islands holding company with microlending operations in China. The company will use the proceeds of IFC’s $2.5 million convertible loan to grow its business and extend loans to underserved segments of the market, including microentrepreneurs, small businesses, and other small cash-generation activities that find it difficult to obtain access to finance.
IFC's investment in Zhong An Credit will provide comfort to other investors and local banks and help the company obtain much-needed long-term funding to support its microfinance activities. IFC will also help build the company’s institutional capacity and enable it to operate commercially and sustainably.
Li Jie, General Manager of Zhong An Credit, said, “We are confident that with the support of IFC and other financial institutions in China, Zhong An Credit will be able to play an important role in serving and helping an underserved segment of the market in line with the Chinese government’s policies.”
Richard Ranken, IFC Director for East Asia and Pacific, said, “We are very pleased to partner with Zhong An Credit in our efforts to provide more funding opportunities to local small businesses that are underserved by the traditional banking sector. Building viable microfinance institutions is a vital part of IFC's strategy in China, especially in poor and rural areas. This project will have a strong demonstration effect and show that microfinance lending is commercially viable.”
Mamta Shah, IFC Director for Global Financial Markets, Asia, Europe, Middle East and North Africa, said, “Unsecured lending is just emerging in China and IFC's strategy is to support microfinance institutions that can attract the capital needed to scale up and respond to unmet demands. This agreement with Zhong An Credit is a first step in what we expect to be a long-term relationship. It is also a first step in IFC's efforts to build a presence in the country’s microfinance sector.”