The Belgian Investment Company for Developing Countries (BIO) has provided a $15 million loan to Mutual Trust Bank (MTB) to expand its portfolio dedicated for micro, small and medium enterprises (MSMEs) alongside sustainable financing initiatives.

The loan will have a tenure of five years, including a one-year grace period, while the interest rate will be the Secured Overnight Financing Rate (SOFR) of 6 percent plus below 3 percent.

BIO's first foreign currency transaction in Bangladesh, the loan showcases a shared commitment to creating measurable positive impacts on the economy and environment, according to a statement published on BIO's website last week.

"This collaboration is a remarkable journey that goes beyond financial transactions. Together, we are creating a partnership that fosters positive transformation," said Frédéric Vereecke, investment officer at BIO.

The project delivers a multitude of benefits for Bangladesh. By providing increased access to finance for MSMEs, this initiative will foster business growth and create new job opportunities, read the statement.

Furthermore, the promotion of sustainable financing practices will equip businesses with the tools they need to mitigate climate risks, it said.

This comprehensive approach also promotes financial inclusion, ensuring that underserved populations can participate in the formal economy, it said.

Ultimately, this partnership contributes to the advancement of several UN Sustainable Development Goals (SDGs) in Bangladesh, fostering a more prosperous and sustainable future for the country, it added.

BIO also offers technical assistance to MTB to address gender equality within the bank's operations and lending practices. This comprehensive approach aims to ensure inclusive financial services that benefit all segments of the Bangladeshi economy, said the statement.

TSW Capital Services Private, one of the leading financial advisory firms headquartered in Mumbai, played a major role as transaction advisor for this funding.

"We are delighted to partner with BIO as we continue to empower businesses and fuel growth in Bangladesh," said Syed Mahbubur Rahman, managing director and CEO of MTB.

This financing represents a landmark for MTB's engagement with foreign development finance institutions and provides much-needed USD liquidity in a challenging foreign exchange landscape, he added.

Rahman said it was a positive indication that foreign investors had kept faith and confidence on the country.

MTB is trying to avail alternative sources of financing. It has already secured a loan from the Swiss Investment Fund for Emerging Markets and will secure another from Norfund, he added.

MTB bagged an $8 million loan from the Swiss Investment Fund for Emerging Markets in May and a $20 million debt facility from Norfund in 2018.

Last year, the Norwegian investment fund become MTB's single largest shareholder, with a 9.5 percent stake.

MTB has already fully repaid the $20 million debt to Norfund, Rahman added.

Listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange, MTB started its operations in 1999. Its profits rose around 21 percent year-on-year to Tk 286 crore in 2023.

The bank's non-performing loans were 6.54 percent of its total lending of Tk 26,102 crore.

Its stocks rose 1.55 percent to Tk 13.10 at the DSE yesterday.