State-owned banks are often used for policy lending that target specific sectors offering low interest rates and preferential terms. It is important that during project preparation, financial intermediaries selected are aligned with the market-based approach of FIL projects to avoid crowding out subloans and nonparticipation of selected intermediaries in lending to the target sector. When government policy lending programs through state-owned banks, coexist with ADB's financial intermediation loan project in the same geographical areas, there is a risk of nonparticipation of these banks in ADB's subloans as they may choose to prioritize government's supported programs.
Gansu Featured Agriculture and Financial Services System Development Project