The World Bank has approved US$95 million for a project to create employment opportunities by providing financial access to more than 100,000 small and medium enterprises (SMEs) in Nepal.
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The project will further strengthen and sustain Nepal's Deposit and Credit Guarantee Fund (DCGF), which supports small businesses that do not have sufficient assets to hold collateral in banks, said David Sislen, Country Division Director for Maldives, Nepal and Sri Lanka for the World Bank.
It is expected to bring new facilities and incentives, especially for women entrepreneurs, and create an environment where banks feel confident in investing in small businesses.
‘This will expand financial inclusion by facilitating financial access and transactions, and will help small and medium-sized enterprises to join regional and global value chains,’ said Sislen, ‘and promote job creation and private-sector-led economic growth.’
Through this project, the World Bank has stated that it will enhance the technical and institutional capacity of the Credit Information Center. Technology will be used to maintain accurate details and credit histories of those seeking loans, and
data security and privacy will be strengthened, the statement said. It is being sought to make it easier for banks to assess risks using new technology. The statement said that the International Monetary Fund is supporting this initiative.
‘The lack of adequate collateral and a history of limited credit flow have limited access to affordable finance for small and medium enterprises, while financial institutions also lack adequate data to assess risk before disbursing loans,’ said Sabin Raj Shrestha, Senior Financial Sector Specialist at the World Bank for South Asia. ‘This project will address that problem. This will enable small entrepreneurs to connect to larger markets and the global trading system.’
