Kathmandu. KATHMANDU: The World Bank Board of Directors has approved a $95 million project for promoting sustainable and inclusive finance in Nepal.

The project aims to promote employment-driven economic growth by providing financial access to more than 1 lakh small and medium enterprises.

David Sislane, World Bank Country Director for Maldives, Nepal and Sri Lanka, said: “The project will further strengthen Nepal’s deposit and credit guarantee fund, expand risk sharing, strengthen financial sustainability, and launch new guarantors for underserved sectors such as women-led businesses. ”

By facilitating access to finance and reducing transaction barriers, the project will enable MSMEs to connect regional and global value chains, create jobs, and support private sector-led economic growth.

The Sustainable and Inclusive Finance Project builds on reforms initiated under the World Bank-run Financial Sector Stability and Finance for Growth Development Policy Credit completed in 2024. The reform program prioritized financial access for the underserved.

The project will also invest in enhancing the technology and institutional capacity of the Nepal Credit Information Bureau. It will help expand data coverage, integrate alternate data sources, and strengthen data security and privacy. The International Finance Corporation (IFC) has also been assisting in this work. The project also aligns with the Government of Nepal’s recently approved Second Financial Sector Development Strategy.

“Small and Medium Enterprises (SMEs) have long been deprived of access to affordable financial services due to a lack of adequate collateral and limited credit history,” said Sabin Raj Shrestha, Senior Financial Sector Specialist for South Asia Region and Project Task Force. This has also made it difficult for lenders to assess credit risk. ”

According to him, the DCGF has been made more effective by upgrading the Management Information System, streamlining the claim payment process and transforming it towards a risk-based fee system.