World Bank Approves $80 Million Loan to Strengthen Nepal’s Financial Sector

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Kathmandu, May 7: The Executive Board of Directors of the World Bank has given the green light to a development policy loan worth $80 million for Nepal. This financial assistance aims to bolster the stability of Nepal’s financial sector, broaden financial solutions, and enhance access to financial services.

This marks the third Finance for Growth Development Policy Credit provided by the World Bank, specifically designed to enhance the functioning of Nepal’s financial sector in support of private sector-led growth.

The implementation of this program will focus on reinforcing supervision within Nepal’s banking and insurance sectors, fostering innovation in financial products across capital, insurance, and disaster risk markets, as stated by the World Bank. Furthermore, the initiative will prioritize enhancing financial inclusion through digitalization, strengthening credit infrastructure, and improving financial literacy, with a particular emphasis on empowering women entrepreneurs.

Commenting on the project, Faris Hadad-Zervos, the World Bank Country Director for Nepal, Sri Lanka, and the Maldives, highlighted its significance in advancing Nepal’s green, resilient, and inclusive development agenda. He expressed optimism that the initiative would create an enabling environment for private investment, ultimately contributing to economic growth, especially benefiting the poor and vulnerable segments of society.

The program will also bolster efforts to monitor climate risks by incorporating climate-related risks into the banking sector’s risk assessment processes, introducing risk-informed pricing for insurance products, establishing frameworks for green bond issuance, and facilitating climate-related mitigation in credit guarantee products.

Overall, this operation aligns with the Government of Nepal’s ambitious financial sector reform agenda, which aims to catalyze private sector-led growth. Through reforms in banking, insurance, and capital markets, Nepal seeks to enhance the flexibility of its financial sector and mobilize private capital to drive sustainable economic development.

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