Kathmandu. KATHMANDU: Development financial institution and impact investor British International Investment Association (BIA) and Laxmi Sunrise Bank have signed a loan agreement of USD 25 million to expand financial access to Micro, Small and Medium Enterprises (SMEs) in Nepal.

According to the agreement, long-term credit will be extended to the micro, small and medium enterprises sector through this investment. About 30 per cent of the total loan facility will be allocated for women-led businesses.

The Micro, Small and Medium Enterprises sector contributes about 22 percent to Nepal’s GDP and employs about two million people. However, only 16 percent of enterprises have been able to get credit facilities through the formal financial system due to limited access of financial institutions and complexities related to the banking process.

The collaboration is expected to contribute to creating jobs, promoting entrepreneurship and developing an inclusive private sector by providing capital to business community that lacks financial access.

The bank has received recognition under 2Exchange, a global initiative to promote women’s economic empowerment. The accreditation is based on the bank’s progress in governance, leadership, employment and gender inclusion across the loan portfolio.

Meanwhile, the bank pledged to further strengthen its environmental and social management systems. It is expected to make sustainability strategies, responsible banking practices and environmental and social risk management more effective.

UK Minister for Indo-Pacific Affairs and Equality Seema Malhotra said that the UK’s partnership with Nepal is long-term and important to advance women entrepreneurship and inclusive economic development.

Srini Nagarajan – Asia Region Chief and Managing Director of British International Investment Association, said, “Nepal is an important part of its leading developing markets strategy and has partnered with Laxmi Sunrise Bank to support businesses that do not have access to finance.