ADB policies for financial intermediation loans require that onlending rates for subborrowers should be market-based. For the PSDP, the Bank of Maldives line of credit facility onlending rates were in line with similar loan schemes in the Maldives targeting MSMEs from financial intermediation loans from other international financial institutions, and were in excess of Bank of Maldives' cost of funds. The line of credit facility lending priorities included extending credit to new MSMEs in outlying atolls, where the broader strategy was to support inclusive economic growth, job creation, inclusion of outer islands in national development, and private sector investments. In future, projects involving financial intermediation loans will require careful monitoring of compliance with ADB policies. This is particularly important for onlending to repeat MSME borrowers to ensure a move towards more commercial lending practices.
Private Sector Development Project