World Bank approves $95 million project for Nepal

Kathmandu. KATHMANDU: The World Bank Board of Directors has approved a project worth USD 95 million (approximately Rs 12 billion) to promote a sustainable and inclusive financial system in Nepal. According to the World Bank, the project will provide financial access to more than one lakh small and medium enterprises (SMEs) and support employment-based economic growth.

David Sislane, World Bank Country Division Director for the Maldives, Nepal and Sri Lanka, said, “The project will strengthen Nepal’s Deposit and Credit Guarantee Fund (DCGF) to expand risk allocation, increase financial sustainability, and introduce new guarantees to underserved groups such as women entrepreneurs.

According to him, easing access to finance will help integrate MSMEs into regional and international value chains. The Sustainable and Inclusive Finance Project (SIF) will continue the reforms made under the World Bank-supported Financial Sector Stability and Finance for Growth Development Policy (DPC) in 2024.

These reforms made access to finance a key priority for the underserved. The project will enhance the technology and institutional capacity of the Credit Information Bureau Nepal (CIBN). For this, data coverage will be expanded, alternative data sources will be integrated, and data security and privacy will be strengthened. The International Finance Corporation (IFC) is also assisting in this effort. The project will also align with the Government of Nepal’s recently approved Second Financial Sector Development Strategy.

According to Sabin Raj Shrestha, Senior Financial Sector Specialist for South Asia Region and Project Task Team Leader, SMEs are finding it difficult to access affordable financing due to lack of adequate collateral and limited credit history.

He said that the management information system of DCGF will be upgraded, claim payment process will be improved and risk-based pricing system will be implemented. The support from the World Bank is expected to help create jobs led by the private sector, promote entrepreneurship and make Nepal’s financial sector more inclusive and sustainable.