[{"bbox": [97, 153, 1135, 231], "category": "Text", "text": "In this general context, it is worth analysing the role and functions of the State-Owned Banks as sustainable finance providers, partners in the EU blending operation on Access to Sustainable Finance for Green and Climate-Smart Value-Chains, and beneficiaries of the technical assistance described in this Action Document."}, {"bbox": [97, 258, 1135, 392], "category": "Text", "text": "**The role of the State-owned Banks BANHPROVI and BANADESA stands out for bringing access to finance for the country's sustainable development.** These financial institutions, given their development mission, can play a critical role in supporting the growth and development of green value chains, particularly in the rural areas, enabling the \"green transition\" and system-wide change needed in the country, strategically addressing MSME's critical economic, social, and environmental challenges."}, {"bbox": [97, 418, 1135, 551], "category": "Text", "text": "**THE NATIONAL BANK FOR PRODUCTION AND HOUSEHOLDS (BANHPROVI)**, plays a leading financial role as a) First tier banking: social households programme; b) Second tier banking for middle-class households and productive agriculture specifically for vegetable and animal production, agriculture technology, agribusiness and Agri-market) with local banks and financial entities such as: commercial banks, cooperatives, financial institutions, private organizations for financial development, rural banks and trading companies."}, {"bbox": [97, 577, 1135, 683], "category": "Text", "text": "**Evolution into a development bank (2018-2022):** The period 2018-2022 has coincided with the transformation of BANHPROVI into a comprehensive development bank. In addition to granting credits through first and second-tier banking, the range of other banking services expanded. These included the administration of trusts²⁹, the management of Guarantee Funds, and Electronic Transaction Services."}, {"bbox": [97, 709, 1135, 975], "category": "Text", "text": "**Financial Overview and Strategic Goals:** The bank traditionally operates with a pool of approximately 30 intermediary financial institutions, supervised by the National Banking and Insurance Commission. The loan portfolio balance as of June 30, 2022, amounted to HNL 36,229.86 million (equivalent to EUR 1,195.95 million), with the destination of the credits reflecting the most important long-term funding needs of the IFIs in the country. By 2024, the goal is to allocate around HNL 12.5 billion equivalent to EUR 4,125 million) in the areas of housing, production, and MSMEs. The current concentration of disbursements indicates that resources are channeled through regulated intermediaries, with commercial banks having the greatest access to funds. It is worth noting that this concentration of credit in the housing sector is mainly due to the association that the Honduran population makes between the bank and affordable housing. Consequently, BANHPROVI's funds are mostly concentrated in the departments of Francisco Morazán and Cortés³⁰."}, {"bbox": [97, 1001, 1135, 1214], "category": "Text", "text": "**BANHPROVI faces challenges in serving excluded segments and enhancing financial inclusion.** Based on the current bank's portfolio, we can observe that BANHPROVI offers some financial products aligned with the technological and climate-smart focus of the Action, but they are not appropriately focused on serving excluded segments or those seeking financial inclusion. In relation to this, the Action can contribute to materialize the following recommendation of the Honduran Ministry of Finance: \"*Being a solid financial institution with sufficient resources for granting loans, BANHPROVI is advised to consider venturing into another economic activity or creating new financial products. This would prevent the resources from remaining inactive and, at the same time, generate greater profitability and coverage of the services it provides*\"³¹."}, {"bbox": [97, 1240, 1135, 1373], "category": "Text", "text": "Indeed, in the case of BANHPROVI, technical assistance could play a crucial role in mitigating risks and bolstering investors' confidence. It underscores the significance of technical assistance in blended finance, especially for the 'missing middle' — i.e. small and medium enterprises (SMEs) — which find themselves in a financial “grey area”. These enterprises are deemed too large for microfinance, but too small or risky to access capital from conventional debt and equity investors."}, {"bbox": [86, 1491, 1144, 1557], "category": "Footnote", "text": "²⁹ As part of President Castro's Government Plan to Refound Honduras, the repeal of trusts constituted with public funds was established, and their incorporation into the General Budget of Revenues and Expenditures of the Republic was determined. In this sense, as mandated by law, all resources managed through trusts were deposited into the Single Account of the General Treasury of the Republic."}, {"bbox": [86, 1556, 1144, 1601], "category": "Footnote", "text": "³⁰ CEPAL, (2017). \"Estudio de caso sobre estrategias para promover la inclusión financiera de pequeños productores rurales en Honduras,\" *Tegucigalpa*."}, {"bbox": [86, 1601, 1144, 1645], "category": "Footnote", "text": "³¹ Ministry of Finance (SEFIN) (2022). Decentralized Public Sector of Honduras, Financial Management Report, II Quarter. Tegucigalpa, Honduras"}, {"bbox": [1028, 1682, 1144, 1706], "category": "Page-footer", "text": "Page 10 of 38"}]