KATHMANDU, MAY 8: The Board of Executive Directors of the World Bank (WB)has approved an $80 million development policy credit for Nepal to strengthen the stability of the financial sector, diversify financial solutions, and increase access to financial services.
The third Finance for Growth Development Policy Credit, approved yesterday, aims to improve the functioning of the financial sector to support private sector-led growth. “The operation will strengthen the supervision of the banking and insurance sectors in Nepal and foster financial product innovations in capital, insurance, and disaster risk markets. The operation will also increase financial inclusion through digitalization, enhanced credit infrastructure and improved financial literacy, with a focus on women entrepreneurs,” states a press communique issued by the WB.
“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,” Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka, was quoted as saying by the release.
The operation also supports Nepal’s climate agenda by enhancing supervision of climate risks by requiring disclosures of climate-related risks and impacts of the banking sector portfolio and introducing risk-informed pricing for insurance products, including climate risks, among others, according to the release. Establishing a framework for the issuance of green bonds integrating climate-related mitigation and adaptation commitments into credit guarantee products is another assistance offered by the operation.
“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,” reportedly stated Tatsiana Kliatskova, World Bank task team leader for the project.
