World Bank Approves $80 Million for Financial Sector Reform in Nepal

Kathmandu — The World Bank’s Board of Executive Directors has approved an $80 million development policy credit for Nepal to strengthen the country’s financial sector, diversify financial solutions, and increase access to financial services.

The third Finance for Growth Development Policy Credit is set to enhance the stability and efficiency of the financial sector, supporting private sector-led growth in Nepal. It will achieve this by reinforcing supervision in the banking and insurance sectors and promoting innovation in capital, insurance, and disaster risk markets.

Additionally, the operation will increase financial inclusion through digitalization and improved credit infrastructure. Special emphasis will be placed on enhancing financial literacy, particularly benefiting women entrepreneurs.

“This project supports Nepal’s green, resilient, and inclusive development and will help create an enabling environment for private investment to contribute to Nepal’s economic growth, particularly benefiting the poor and vulnerable,” said Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka.

The initiative also aligns with Nepal’s climate agenda by enhancing supervision of climate risks in the banking sector and promoting risk-informed pricing for insurance products. It introduces a framework for the issuance of green bonds and incorporates climate-related commitments into credit guarantee products.

“This operation supports the government’s transformative financial sector reform agenda to promote private sector-led growth. The reforms in banking, insurance, and capital markets are instrumental for the sector’s resilience and the critical role it plays to enable private capital mobilization,” said Tatsiana Kliatskova, World Bank task team leader for the project.

This financial support is expected to contribute significantly to Nepal’s economic growth by fostering a stronger and more diverse financial sector.

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