World Bank Approves USD 95 Million Project to Expand Sustainable and Inclusive Finance in Nepal

Kathmandu — The World Bank Board of Executive Directors has approved a USD 95 million (approximately NPR 12 billion) project aimed at expanding sustainable and inclusive finance in Nepal.

The project seeks to improve access to finance for more than 100,000 small and medium-sized enterprises (SMEs), thereby promoting employment-oriented economic growth. A key focus of the initiative is to strengthen Nepal’s Deposit and Credit Guarantee Fund (DCGF) to support risk-sharing mechanisms, enhance financial sustainability, and introduce new guarantee products for underserved segments, including women-led businesses.

According to David Sislen, World Bank Country Division Director for Maldives, Nepal, and Sri Lanka, improved access to finance and reduced transaction barriers will help micro, small, and medium enterprises (MSMEs integrate into regional and global value chains. This, he noted, will contribute to job creation and private sector–led economic growth.

The Sustainable and Inclusive Finance Project builds on reforms introduced under the Financial Sector Stability and Finance for Growth Development Policy Credit completed by the World Bank in 2024. These reforms prioritized expanding financial access to underserved sectors of the economy.

Under the project, Nepal’s Credit Information Bureau will receive support to enhance its technological and institutional capacity. Planned interventions include expanding data coverage, incorporating alternative data sources, and strengthening data security and privacy frameworks. The International Finance Corporation is also supporting these efforts. The project aligns with Nepal’s recently approved Second Financial Sector Development Strategy.

Sabin Raj Shrestha, Senior Financial Sector Specialist for South Asia and Task Team Leader of the project, stated that SMEs in Nepal often struggle to access affordable finance due to insufficient collateral and limited credit histories. He explained that the project will upgrade the DCGF’s management information system, improve claim settlement processes, introduce risk-based pricing, and implement a first-loss coverage mechanism to make the fund more effective.

The project is expected to make a significant contribution to expanding financial inclusion, strengthening SMEs, and supporting long-term economic stability in Nepal.