AraratBank and FMO unlock funding for underserved entrepreneurs

ArmInfo.FMO and AraratBank today announce the signing of a USD 10mln NASIRA loan portfolio guarantee. This innovative risk sharing program will make it easier for AraratBank to provide funding to youth, migrant, women and COVID-19 affected entrepreneurs, as losses on the loan portfolio will be carried by both parties. 

The NASIRA program is a risk sharing facility for local financial institutions, supported by the European Union and MASSIF, the financial inclusion fund FMO manages on behalf of the Dutch government. It is a new way of unlocking support to underserved segments, specifically young, female, COVID-19 affected and migrant entrepreneurs.

“In the longstanding relationship with FMO, AraratBank has proven to be a socially engaged bank, also demonstrated by their interest in the Nasira target customers. Especially in Armenia, with a large diaspora, this will also include returnees. These groups often remain underbanked due to high risks - both perceived and real - involved in lending to them, due to absence of collateral and credit history, among others. The guarantee program takes away this hurdle, by agreeing in advance to share possible credit losses. A technical assistance program is ready to support AraratBank in their plans to reach out to NASIRA target segments”,  stated by FMO press service.

"I am delighted that the years of eraned trust has today led to the signing of one-of-a-kind agreement. The NASIRA program stands out for its risk sharing where   AraratBank and FMO will jointly bear the risk of default on the loans to financially vulnerable businesses, enabling beneficiaries to establish and grow their businesses in Armenia. Another noteworthy feature of this program is that it is unprecedented also in the whole region․It’s no secret that banks avoid financing financially vulnerable and high-risk businesses. We are happy that AraratBank comes up with such an offer, as we highlight the importance of providing access to finance and equal terms for all borrowers,” said Mher Ananyan, Chairman of the Executive Board of AraratBank.

,,In our longstanding relationship with AraratBank, signing the NASIRA loan portfolio guarantee is an exciting next step. By reducing the perceived and actual risk of financially underserved groups and COVID-19 affected businesses, FMO aims to contribute to reducing inequalities within Armenia and enhancing financial support to small businesses during the COVID-19 crisis and its recovery period,’’ said Huib-Jan de Ruijter, Chief Investment Officer a.i. of FMO.