Funder

The DB MDF's mission is to develop indigenous financial systems that serve the poor by catalyzing linkages between local financial institutions - fundamental sources of capital - and microfinance institutions (MFIs). The DB MDF is a non-profit fund which provides MFIs with catalytic financing that attracts resources on a leveraged basis from local commercial banks.

The DB MDF provides financing facilities (loans and letters of credit) which are structured as subordinated, below market rate financing (1-to-5% annual rate) with maturities of 1 to 5 years. Funding from the DB MDF is used to leverage capital from local commercial financial institutions, at a 2:1 ratio, for direct lending to the poor. The Fund is flexible in accepting a lower leverage ratio at the initial stage, with the condition that the local bank will gradually increase the leverage over time. (Refer to the diagram of a typical transaction at www.db.com/community.) Relationships with commercial banks and financial institutions enable the microfinance institutions to leverage sustainable conventional debt, grow their programs to scale, and work towards the economies of scale needed to become self-sufficient.

The Deutsche Bank Microcredit Development Fund is a tax exempt U.S. corporation, conceived with the focus of helping microfinance institutions reach scale and long-term sustainability. By providing high risk catalytic money, the Fund facilitates financial self-sufficiency by fostering enduring relationships between microfinance institutions and local commercial banks.

Within the DB MDF, we have also created a Start-up Loan Fund which provides capital to early stage, commercially oriented MFIs. The Start-Up Fund provides loans ranging from USD $25,000-$100,000 to be matched by local funds; the Start Up Loan is to be restricted for use in the MFI's loan portfolio, and generally not used for operating expenses; terms range from 2-5 years.





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