World Bank Group Backs Nepal's Small Businesses with Risk-Sharing Facilities to Create Jobs

Kathmandu, September 30, 2026 — Thousands of small businesses across Nepal are set to gain access to the capital needed to grow and create jobs, as the International Finance Corporation (IFC), a member of the World Bank Group focused on the private sector, announced its first-ever risk-sharing facility in the country—a milestone investment designed to facilitate new lending for micro, small and medium-sized enterprises (MSMEs).

The need to support small businesses is even more pressing in the wake of the devastating floods of August 2026, which have disrupted livelihoods and businesses across the country. Supporting MSMEs is critical to job creation and long-term growth as Nepal recovers and rebuilds.

The transaction is intended to strengthen banks’ capacity to extend credit to MSMEs that have historically faced constraints in accessing finance. By sharing 50 percent of the risk on eligible MSME loans, IFC aims to expand lending in a market in which financing has not consistently reached the entrepreneurs who need it most, including women-owned enterprises. 

With Siddhartha Bank Limited (SBL), IFC is covering a US$40 million loan portfolio, split between its own account and mobilized capital, to help the bank double its MSME portfolio by 2030. With Laxmi Sunrise Bank Limited (LSL), IFC is covering a US$20 million portfolio expected to support more than 5,400 jobs nationwide. Both facilities will prioritize women-owned MSMEs and businesses transitioning to clean-energy technologies, including cleaner boilers, in step with Nepal's clean air goals.

"The partnership with IFC on the Risk Sharing Facility marks a significant step in expanding our MSME portfolio. It strengthens our capacity to finance more small businesses across the country at a time when small businesses are negotiating through a challenging economic environment. By growing our lending to this vital sector while upholding our prudent lending standards, we aim to encourage entrepreneurs, create jobs, and contribute to Nepal's inclusive growth" said Rameshwar Prasad Bashyal, Chief Executive Officer, Siddhartha Bank.

MSMEs are central to Nepal’s economy, contributing 22 percent of GDP and 60 percent of employment, yet they face a significant financing gap. Women-owned MSMEs face even steeper constraints, with high borrowing costs, limited collateral, and few tailored financial products limiting access to credit.

“MSMEs have been an important part of our lending strategy. This partnership will strengthen our ability to extend financing to a broader range of MSMEs, particularly women-owned businesses and those adopting cleaner technologies. By sharing risk with IFC, we can expand lending more confidently while continuing to build a stronger and more sustainable MSME portfolio. We expect the facility to support enterprise growth, create more jobs and encourage greener investment across Nepal,” said Ajaya B. Shah, Chief Executive Officer, Laxmi Sunrise Bank.

These facilities are supported by a pooled guarantee from the IDA Private Sector Window Blended Finance Facility, as part of the World Bank Group's broader effort to mobilize private capital into emerging markets, and through the Small Loan Guarantee Program (SLGP), a programmatic approach to de-risking and scaling up financing for MSMEs. 

"Every loan extended for a small business is a step toward a new job, a new livelihood, and a more resilient community. This transaction shows how targeted risk-sharing can change the calculus for banks and open the door for Nepal's entrepreneurs to grow, hire, and invest in their future," said Allen Forlemu, IFC Regional Industry Director, Financial Institutions Group, Asia Pacific.

Beyond financing, IFC will provide technical assistance to both banks to support the rollout of their risk-sharing facilities and to strengthen environmental and social risk management practices, helping build the foundation for MSME lending to expand further across Nepal's financial sector.

This project is closely aligned with the World Bank Group's Country Partnership Framework for Nepal for FY25–31, which centers on more and better jobs, connected communities, and a more sustainable, resilient future.