WASHINGTON, February 3 — The World Bank has approved a $95 million operation designed to expand financial access for over 100,000 small and medium enterprises (SMEs) in Nepal. The initiative aims to drive job-led growth by strengthening the country’s financial infrastructure and reducing barriers for underserved businesses.
The Sustainable and Inclusive Finance Project (SIF) focuses on reinforcing Nepal’s Deposit and Credit Guarantee Fund (DCGF). According to World Bank officials, the project will upgrade the fund’s management information system, improve the efficiency of claims settlements, and transition the entity toward risk-based pricing and first-loss coverage.
“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 Nepal. Sislen added that 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.
To address issues regarding inadequate collateral and limited credit histories, the project will invest in the institutional capacity of the Credit Information Bureau of Nepal (CIBN). Supported by the International Finance Corporation, the project intends to expand data coverage, integrate alternative data sources, and enhance data security and privacy protocols.
Sabin Raj Shrestha, Senior Financial Sector Specialist for the South Asia Region and Task Team Leader, noted that these constraints have long limited affordable finance for SMEs while hindering the ability of lenders to accurately assess credit risk.
The SIF project builds upon previous reforms supported by the World Bank’s Financial Sector Stability and Finance for Growth Development Policy Credit series, which concluded in 2024. The operation also aligns with the Government of Nepal’s recently approved second Financial Sector Development Strategy to foster private sector-led growth.
