Bank of Banks The project involves establishing the first microfinance wholesale bank in Indonesia, Bank of Banks (BoB or the Bank), which will serve the vast and under-served Indonesian microfinance institutions (MFIs). The wholesale bank will provide full-fledged financial products and services, which are currently unavailable to thousands of qualified MFIs throughout the country. Subsequently, working in partnership with the wholesale bank, MFIs will be able to extend a range of innovative financial products to their clients, the micro enterprises, including remittances, micro-insurance and technology-enabled services including ATMs and E-banking.   The project involves an IFCs equity investment of up to $5 million equivalent to participate in the purchase of the license of a small local commercial bank, PT Bank Sri Partha (BSP), and to provide seed capital to allow a start up operation of BoB. - Directly strengthening the microfinance sector:   Most MFIs depend primarily on limited client deposits for their source of funds and consistently cite the lack of access to affordable capital as their key constraints for growth. This project will significantly increase in MFI access to financial products and services. Ultimately this project will also increase access to financial services for low-income people and micro-entrepreneurs throughout Indonesia. In the first three years, BoB expects to reach 620 MFI clients through which around 3.2 million of micro-entrepreneurs and low-income people can obtain financing.  - Supporting banking and microfinance consolidation:    BoB establishment will provide a significant growth opportunity for small undercapitalized local bank. In the long run, the Bank is expected to be an important unique player in Indonesia. Indonesias Central Bank has specifically requested IFCs assistance and support for its consolidation plans. Additionally, BoB will also support microfinance sector consolidation. BoB will attract and highlight the best performing MFIs as BoB clients to provide the rest of the market with a best-practice benchmark and offer incentives in the market to attain scale through transformation and or mergers and acquisitions.  - Creation of a model wholesale bank for MFI:   The Bank will serve as the first wholesale bank for the MFIs, which is currently nonexistent and seriously needed in Indonesia and many other countries. As the correspondent bank, the Bank will offer a range of products and services to MFI to allow for more predictable use cash flow and profitable use of their assets. If BoB turns out to be a successful venture in coming years, it would create a powerful demonstration effect whereby BoB can be replicated in other markets with large number of MFIs.  - Deepening the microfinance sector through technology:   The Bank will incorporate technology and international best practice in providing services to MFIs. And as a technology-enabled enterprise, the Bank has a distinct value proposition by delivering to its clients the value of scalable electronic banking products and shared IT services which help deepen the microfinance sector.  - Broadening MFIs access to international investors:   The Bank would facilitate a broader access to international investors for Indonesian MFIs.  This would also deepen the Indonesian financial sector.