World Bank Approves $80 Million Credit for Nepal to Strengthen Financial Sector and Promote Inclusive Development

The World Bank’s Board of Executive Directors has approved an $80 million development policy credit for Nepal, aimed at bolstering the stability of its financial sector, expanding financial solutions, and improving access to financial services.

This third Finance for Growth Development Policy Credit targets the enhancement of Nepal’s financial sector functionality, with a focus on fostering private sector-led growth. The initiative entails heightened supervision in Nepal's banking and insurance sectors and the promotion of innovation in financial products, particularly within capital, insurance, and disaster risk markets. Additionally, it seeks to advance financial inclusion through digitalization, strengthen credit infrastructure, and enhance financial literacy, with a specific emphasis on empowering women entrepreneurs.

According to Faris Hadad-Zervos, World Bank’s Country Director for the Maldives, Nepal, and Sri Lanka, this project aligns with Nepal’s objectives for green, resilient, and inclusive development, facilitating an environment conducive to private investment and economic growth, particularly benefiting disadvantaged populations.

Moreover, the initiative contributes to Nepal's climate agenda by mandating disclosures of climate-related risks and impacts within the banking sector portfolio, implementing risk-informed pricing for insurance products, including climate risks, establishing a framework for issuing green bonds, and integrating climate-related mitigation and adaptation commitments into credit guarantee products.