Kathmandu: The World Bank’s Board of Executive Directors has approved a $95 million operation aimed at expanding access to finance for more than 100,000 small and medium enterprises (SMEs) and promoting job-led growth in Nepal.
The project will strengthen Nepal’s Deposit and Credit Guarantee Fund (DCGF) by expanding risk-sharing mechanisms, enhancing financial sustainability, and introducing 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.
He said the initiative will ease access to finance and reduce transaction barriers, helping to broaden financial inclusion, integrate micro, small and medium enterprises (MSMEs) into regional and global value chains, and support private sector–led growth and job creation.
According to the World Bank, the Sustainable and Inclusive Finance Project (SIF) builds on reforms supported under the World Bank–financed Financial Sector Stability and Finance for Growth Development Policy Credit (DPC) series, which concluded in 2024 and prioritized access to finance for underserved segments.
The project will also invest in technology and institutional capacity at the Credit Information Bureau of Nepal (CIBN) to expand data coverage, integrate alternative data sources, and strengthen data security and privacy. The International Finance Corporation (IFC) has been supporting CIBN in this effort. The initiative aligns with the Government of Nepal’s recently approved Second Financial Sector Development Strategy.
“Inadequate collateral and limited credit histories have long constrained SMEs’ access to affordable finance and limited lenders’ ability to accurately assess credit risk,” said Sabin Raj Shrestha, Senior Financial Sector Specialist for South Asia and Task Team Leader for the project. “The DCGF will be strengthened through upgrades to its management information system, improved claims-settlement efficiency, and a transition to risk-based pricing and first-loss coverage.”
