The Asian Development Bank (ADB) is a multilateral development finance institution
founded in 1966 to promote social and economic progress in its developing member
countries in Asia and the Pacific (see ADB’s website: http://www.adb.org/about/main).
2.2 ADB’s principal functions are
- lending funds,
- providing grants,
- providing technical assistance and advisory services,
- promoting investments for development purposes, and
- assisting in coordinating the development policies and plans of developing
member countries.
Inquiries
2.3 Loan disbursement is handled by the Loan Administration Division of the Controller’s
Department.
2.4 For loan service payments and billing matters, inquiries are addressed to the
Accounting Division of the Controller’s Department.
Loan or Grant Regulations
3.4 The regulations4
further set out conditions for the use of loan or grant proceeds
financed by ADB, or proceeds administered by ADB.
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These documents are expressly
incorporated in the associated loan agreement, guarantee agreement, or grant
agreement. If any provision of a loan agreement, guarantee agreement, or grant
agreement is inconsistent with a provision of these regulations, the provision of the
loan agreement, guarantee agreement, or grant agreement governs.
Loan Documents
3.5 Loan documents
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include the following documents and agreements:
ȕ Thereport and recommendation of the President to the Board of Directors
(RRP) presents the project proposal for consideration by the ADB Board.
ȕ Theproject administration manual (PAM)
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includes all the information and
schedules describing project implementation and project readiness filters
covering major preproject implementation actions (e.g., government approvals,
procurement, and resettlement) to ensure a rapid start-up and enable early
disbursement. It is mandatory
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that the PAM be referenced in the RRP and in
the loan (or facility) agreements, is presented as a stand-alone linked document
to the RRP, and serves as the main document describing implementation details.
The PAM is prepared in the course of loan processing and initially agreed with
the government at the loan fact-finding stage. At loan negotiations, the borrower
and ADB shall review and confirm the PAM agreed during loan fact-finding to
ensure consistency with the loan agreement, and such confirmation shall be
reflected in the minutes of the loan negotiations. The detailed cost estimate by
financier (one schedule included in the PAM) is prepared based on Section J6 of
the ADB Operations Manual (Appendix 3A).
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Related illustrative tables are also
provided in this handbook (Appendix 3B).

FINANCIAL INTERMEDIATION LOANS

9:21 AM    


FINANCIAL INTERMEDIATION LOANS

Description
11.1  Financial intermediation loans (FILs)
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seek to help achieving the following objectives:
(i) furthering policy reforms in the financial and real sectors; (ii) financing real sector
investments through market-based allocation mechanisms; (iii) strengthening the
capacity, governance, and sustainability of participating financial intermediaries;
and (iv) helping increase the outreach, efficiency, infrastructure, and stability of the
financial system.
11.2  Development finance institutions (DFIs) and participating financial intermediaries
(PFIs) are autonomous financial intermediary entities authorized by the borrower to
receive loans either directly from the Asian Development Bank (ADB) or through the
borrower for passing on the loan amount to the final beneficiaries as subloans.
11.3  FILs are relent by DFIs and PFIs to sub-borrowers such as small- and medium-sized
industries, enterprises, or individuals for eligible subprojects.
Free Limit
11.4  ADB generally allows financial intermediaries to enter into subloans meeting agreed
criteria without submitting subloan proposals to ADB for amounts up to an agreed
“free limit.” The requirement of a free limit, above which subloan proposals need to
be submitted by the financial intermediary to ADB for prior approval, enables ADB
to satisfy itself on the quality of the financial intermediary’s appraisal of projects and
advise on appraisal techniques and methodology.
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Disbursement Procedures
11.5  Under FILs, ADB provides funds to eligible DFIs and PFIs for onlending, at the
financial intermediary’s credit risk, to final borrowers (sub-borrowers) for eligible
subprojects. Disbursement arrangements and funds flow under FILs should be
provided in the project administration manual (PAM), as they are determined with
project-specific considerations.