ASIATODAY.ID, WASHINGTON — The World Bank has approved a $95 million financing package aimed at overhauling Nepal’s financial ecosystem, targeting expanded access to credit for more than 100,000 small and medium enterprises (SMEs) and accelerating job-led economic growth.
The operation is designed to strengthen Nepal’s Deposit and Credit Guarantee Fund (DCGF)—a key institution in risk-sharing for banks and lenders—by improving its financial sustainability and rolling out new guarantee products for underserved groups, including women-led businesses.
“This operation will expand risk-sharing, reduce transaction barriers, and ease access to finance for businesses that have long been excluded,” said David Sislen, World Bank Country Division Director for Maldives, Nepal, and Sri Lanka on February 3, 2026.
“By doing so, Nepal can deepen financial inclusion, integrate MSMEs into regional and global value chains, and stimulate private sector–driven job creation.”
Rewriting the Rules of SME Financing
Dubbed the Sustainable and Inclusive Finance Project (SIF), the initiative builds on reforms completed in 2024 under the World Bank–backed Financial Sector Stability and Finance for Growth Development Policy Credit (DPC) series. Those reforms positioned inclusive access to finance as a cornerstone of Nepal’s long-term economic strategy.
A critical pillar of the project is the modernization of the Credit Information Bureau of Nepal (CIBN). Investments will expand data coverage, integrate alternative data sources, and strengthen data security and privacy frameworks—a move expected to improve lenders’ ability to assess credit risk. The International Finance Corporation (IFC) is already supporting CIBN in this transformation.
The project also aligns closely with Nepal’s newly approved Second Financial Sector Development Strategy, signaling a coordinated push between international lenders and the government to stabilize and modernize the financial sector.
From Collateral Barriers to Risk-Based Lending
“Limited collateral and thin credit histories have long kept SMEs locked out of affordable finance,” said Sabin Raj Shrestha, Senior Financial Sector Specialist for the World Bank’s South Asia Region and Task Team Leader for the operation.
“The DCGF will be upgraded with a modern management information system, faster claims settlement, and a shift toward risk-based pricing and first-loss coverage.”
By reshaping how credit risk is shared and assessed, the World Bank-backed operation aims to unlock lending at scale, reduce systemic risk, and reposition SMEs as a central engine of Nepal’s economic recovery and growth. (AT Network)
Follow Us at Google News and WA Channel