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Banco Familiar SME Financing Partnership

Project number 11803-04
Country Paraguay
Sector Financial Institutions
Status In implementation

Testing new savings incentives

In Paraguay, where fewer than 22 percent of people report having a bank account and fewer than 10 percent save through a financial institution, Banco Familiar is encouraging customers to put their smart phones to use in banking. Working with IDB Invest, the bank—which serves primarily middle and low-income populations—is testing different types of text reminders and purpose-built apps to help customers estimate their personal cash flow or set savings goals for specific needs or contingencies. By assigning these tools randomly, Banco Familiar and IDB Invest can assess which are most effective and should be offered to all customers.

Basic information

Company name
Banco Familiar S.A.E.C.A.
Investment type Guarantee
E&S category
FI-2
Disclosed date
Projected board date
Approval date
Signed date
Team Leader
Carrasco, Almudena

Financial Summary

Financing amount $ 5,000,000
Financing Currency
USD

PROJECT
SCOPE
AND
OBJECTIVE

The proposed operation includes: a partial credit guarantee of up to 28.5 billion Guaraníes (“PYG”) to be issued in favor of the Instituto de Previsión Social (“IPS”). IPS will provide a loan in Guaraníes to Banco Familiar S.A.E.C.A. (the “Loan”) for up to PYG27 billion, and the Inter American Investment Corporation (“IIC”) will grant a guarantee in favor of IPS covering the credit risk of Banco Familiar (“Guarantee”) under the Loan. The IPS disbursement will be made through a Trust Manager, Agencia Financiera de Desarrollo, through whom IPS will receive payments for the Loan. The Loan will have a term of up to five years, with a grace period of up to two years, and semi-annual amortization. The use of funds for the Loan will be to finance small and medium enterprises (“SMEs”) in the productive sector of Paraguay.

ENVIRONMENTAL
AND
SOCIAL
REVIEW
SUMMARY

1.      Project Description

The proposed project is a partial credit guarantee of up to PYG28.5 billion to be issued in favor of IPS. IPS will provide a loan in Guaraníes to Banco Familiar S.A.E.C.A. (the “Loan”) for up to PYG27 billion, and the IIC will grant a guarantee in favor of IPS covering the credit risk of Banco Familiar (“Guarantee”) under the Loan. The use of funds for the Loan will be to finance SMEs in the productive sector of Paraguay.

2.      Environmental and Social Categorization and Rationale

This operation is classified as an FI-2 under the IIC’s Sustainability Policy. Based upon the nature of this transaction (i.e. a partnership to provide medium term funding to SMEs in the productive sectors), there are likely to be moderate to significant indirect environmental, social or health and safety (“ESHS”) and labor impacts and risks. Banco Familiar’s portfolio is concentrated in consumer goods (49%), but has some exposure in agriculture (14%) and livestock (3%), which present risks in the form of deforestation and land-use change, particularly in the Chaco.

 

3.      Environmental and Social Risks and Impacts

Sub-project environmental and social risks may be related to occupational health and safety, supply chains, deforestation, land-use change, and pesticide/chemical use. Banco Familiar will be required to manage these risks through the development and application of an Environmental and Social Management System (“ESMS”) with strict oversight given to operations in the Chaco or where deforestation is of heightened risk. Banco Familiar will be required to apply the Exclusion List, National Laws, Good Practice Guides in the context of Agriculture, Livestock, and Agro-Industry on-lending, and use a satellite monitoring program for agriculture and livestock on-lending. Additionally, deforestation with IIC’s use of proceeds will not be permitted.  Banco Familiar will be required to report annually, and provide monitoring reports of client activity.

4.      Mitigation Measures/Environmental and Social (“E&S”) Action Plan

Task
Description

Capacity Building in environmental and social standards and supervision for financial intermediaries

Participation in the IIC environmental training workshop for financial intermediaries (or another similar training course as approved by the IIC).

Development and implementation of an Environmental and Social Management System (“ESMS”)

Banco Familiar will establish, with the help of an adequately qualified consultant, an ESMS and provide a copy of the ESMS to IIC for review.

ESMS oversight

Designation of responsibility for overseeing the ESMS to an E&S Manager

Compliance with applicable national environmental and social law

Ensure that clients are in compliance with local law and request copies of environmental permits.

Exclusion of financing from High Value Conservation Areas (“HVCA”)

Banco Familiar to exclude financing with IIC’s proceeds from areas defined as high value conservation and in accordance with a map provided by IIC.

Adopt and implement the Cattle Ranching, Agriculture, and Agro‑Industry Guides

Incorporate the requirements as defined within the respective guides.

Adopt satellite monitoring software for purposes of analyzing and monitoring sub‑project performance

Use the Global Forest Watch Finance application as available. Provide annual monitoring reports that detail any deforestation activity.

Membership within the Mesa de Finanzas Sostenibles

Join the Mesa de Finanzas Sostenibles and actively contribute to its operation and wider engagement with other stakeholders.

 

CONTACT
INFORMATION

For project inquiries, including environmental and social questions related to an IDB Invest transaction please contact the client (see Investment Summary tab), or IDB Invest using the email requestinformation@idbinvest.org. As a last resort, affected communities have access to the IDB Invest Independent Consultation and Investigation Mechanism by writing to mecanismo@iadb.org or MICI@iadb.org, or calling +1(202) 623-3952.

For inquiries, comments and requests about the project

For inquiries, comments and requests about the project

Information Request