IBDAA Microfinance Bank will offer microfinance (loans) and insurance. With an initial capital of $5 million (Php 225 million), Philippine IBDA is the first in Southeast Asia. The capital can increase depending on its stability according to the Nasser Al-Qahtani, AGFUND executive director.
IBDAA, an Arab word which means "innovation", is mainly set-up to support financial services to the poor in developing countries. Services that will be offered include savings, microfinance and insurance. Prince Talal said that AGFUND wants to help people in the region live better lives and there are plans to build more branches in Southeast Asia.
Representatives in private and public sectors have welcomed the initiative of the AGFUND to set up a microfinance bank in the country to the lower class get access to finance. Small and medium enterprises (MSMes) in the Philippines account for 91 percent of all businesses, the lack of access to finances has hindered them from achieving growth.
Varela said that while micro, small and medium enterprises (MSMEs) in the Philippines account for 91 percent of all businesses, the lack of access to financing has prevented them from achieving growth. He said that only 20 percent of small businesses had access to loans from local banks. Poor people are having difficulty in getting financial support from major banks in the Philippines due to strict policies and requirements. Most banks are hesitant to lend money because of the high risks associated with micro, small and medium enterprises.
IBDAA Microfinance Bank will be opened as soon as AGFUND will get the license. AGFUND is hoping it will open before the end of this year.