Kathmandu, Nepal – The World Bank’s Executive Directors Board has approved a project worth $95 million USD (approximately NPR 12 billion) aimed at promoting a sustainable and inclusive financial system in Nepal. This initiative is expected to expand financial access for over 100,000 small and medium-sized enterprises (SMEs) in the country, thereby contributing to job creation and economic growth based on employment.
David Sislane, the Country Director for Maldives, Nepal, and Sri Lanka at the World Bank, highlighted that the project would strengthen Nepal’s Deposit and Credit Guarantee Fund (DCGF), facilitating the expansion of risk-sharing mechanisms and increasing the stability of the financial sector. Additionally, the project aims to introduce new guarantee products tailored to underserved groups, such as women entrepreneurs, who have limited access to financial services.
According to Sislane, by enhancing financial accessibility, SMEs will be better able to integrate into both regional and international value chains, fostering greater economic inclusion. The project, titled Sustainable and Inclusive Finance Project (SIF), will build upon the Financial Sector Stability and Finance for Growth Development Policy Credit (DPC) supported by the World Bank, which is set to conclude in 2024. The reforms introduced through these initiatives prioritize expanding financial access for marginalized and underserved communities.
The project will also focus on improving the Credit Information Bureau Nepal (CIBN)‘s technological and institutional capacity. Plans include expanding data coverage, integrating alternative data sources, and strengthening data protection and privacy measures. This effort is supported by the International Finance Corporation (IFC) as part of its broader collaboration with the World Bank.
The project aligns with Nepal’s recently approved second Financial Sector Development Strategy, which aims to address key challenges in the country’s financial sector. Sabin Raj Shrestha, Senior Financial Sector Specialist for South Asia and the Task Team Leader of the project, noted that SMEs in Nepal often face challenges in accessing affordable finance due to a lack of collateral and limited credit history.
Shrestha further explained that the project would involve upgrading the management information system (MIS) of the DCGF, improving the claims payment process, and implementing risk-based pricing models for financial products. These measures are expected to improve access to credit for SMEs and reduce barriers to financing.
Through this partnership, the World Bank aims to support private sector-led job creation, entrepreneurship promotion, and the development of a more inclusive and sustainable financial sector in Nepal. The project is expected to contribute significantly to the country’s long-term economic growth and financial stability, benefiting a broad range of individuals and businesses across Nepal.
