MICROCAPITAL BRIEF: Changes to Brazilian Development Bank’s (BNDES’s) Microcredit Program Aims to Double Number of Disbursements and Expand Microfinance Portfolio by 50% in Next Two Years

The Brazilian Development Bank (BNDES), a federal public finance company, recently announced changes to its microcredit program that could double the number of disbursements to microfinance institutions (MFIs) and expand its portfolio by 50 percent from BRL 80 million (the equivalent of USD 44.4 million) to BRL 120 million (the equivalent of USD 66.6 million). The changes include the reduction of the minimum amount of capital MFIs must have from BRL 1 million (the equivalent of USD 556,000) to BRL 500,000 (the equivalent of USD 278,000). In addition to the lowered minimum financing amount, BNDES optimized its internal procedures by reducing the time between financing application and the disbursement of funds as well as using improved credit risk analysis procedures to increase the maximum amount of leveraging allowed.

About Brazilian Development Bank (BNDES)

The Brazilian Development Bank (BNDES) was founded in 1952 to provide long-term financing aimed at enhancing Brazil’s development. BNDES finances both large-scale industrial and infrastructure operations and small and medium-sized private businesses. BNDES also invests in education, health, sanitation and microfinance. The bank started investing in microfinance in 1996 and continues to support Brazilian microfinance institutions (MFIs) through the BNDES Microcredit Program. The Microcredit Program currently has a portfolio of BRL 80 million (the equivalent of USD 44.4 million).

By Eric McKay, Research Assistant

Bibliography

[1] BNDES Press Release, “BNDES changes microcredit to expand reach and increase disbursements two-fold”, March 16, 2010, http://inter.bndes.gov.br/english/news/not015_10.asp

Additional Resources

MicroCapital Universe: Brazilian Development Bank (BNDES): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Brazilian+Development+Bank+%28BNDES%29

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