WB approves $95 million to expand access to finance for over 100,000 SMEs

Kathmandu, Feb 3: The World Bank’s Board of Executive Directors has approved a $95 million operation to help expand access to finance for more than 100,000 small and medium enterprises (SMEs) and promote job-led growth in Nepal.

“This operation will strengthen Nepal’s Deposit and Credit Guarantee Fund (DCGF) to expand risk-sharing, enhance financial sustainability, and introduce new guarantee products for underserved segments such as women-led businesses,” said David Sislen, World Bank Country Division Director for Maldives, Nepal, and Sri Lanka.

He added that by easing access to finance and reducing transaction barriers, the operation will broaden financial inclusion, support the integration of MSMEs into regional and global value chains, and foster job creation and private sector–led growth.

According to the World Bank (WB), 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, concluded in 2024, which prioritized access to finance for underserved segments as a key pillar.

Complementing these efforts, the project will invest in technology and institutional capacity of the Credit Information Bureau of Nepal (CIBN) to expand data coverage, integrate alternative data sources, and enhance data security and privacy.

The International Finance Corporation has been supporting CIBN in this endeavor. The project also 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 while limiting lenders’ ability to accurately assess credit risk,” said Sabin Raj Shrestha, Senior Financial Sector Specialist for South Asia Region, and Task Team Leader for the operation. “The DCGF will be strengthened by upgrading its management information system, improving claims-settlement efficiency, and transitioning to risk-based pricing and first-loss coverage.”(RSS)