The Asian Development Bank (ADB) and Citi are to provide US$100mn in microfinance to businesses in developing Asia.

The funding will come in the form of local currency loans to microfinance institutions. Citi will provide the debt, backed by an ADB microfinance guarantee, as part of the ADB’s microfinance programme, which has co-financed US$200mn in India, Bangladesh and Indonesia since 2012.

Microfinance is a more realistic way of funding businesses in many parts of Asia. With commercial banks unwilling to shoulder the risk – particularly international banks – it often falls to smaller institutions on the ground to finance local trade.

By lending in local currency, the risks associated with foreign exchange volatility can be avoided. The ADB says the finance will support business in rural and remote areas around the region.

Citi’s regional head of trade and treasury solutions, Rajesh Mehta, says: “At Citi, we aim to responsibly provide financial services that enable progress and economic growth for our clients. We are honoured to strengthen our collaboration with our strategic partner ADB, and hope to make more meaningful contributions to the development of the emerging markets.”