Kathmandu: The World Bank is to provide Rs 18 billion under the Finance for Growth development policy credit to strengthen Nepal’s financial sector for its green, resilient and inclusive development. The Bank’s Board of Executive Directors took a decision to this effect on Thursday.
“By strengthening the financial sector, this project will contribute to Nepal’s green, resilient, and inclusive recovery and growth path, particularly benefiting the poor and vulnerable,” stated Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka.
The second Finance for Growth operation will support the enhanced supervision of the banking sector to address financial stability risks in the context of the Covid-19 pandemic’s impacts. It will help open up capital, insurance, and disaster risk financing markets, and foster financial product innovations, apart from supporting initiatives to increase liquidity and inclusion through access to external commercial borrowing, financial digitalization, and financial literacy for women, according to a World Bank statement.
This can pave the way for the introduction of green loan principles and incentives for green lending as well as new insurance and capital market products adapted to address both climate mitigation and adaptation challenges.
“Through this project, we look forward to supporting the government’s transformative financial sector reform agenda which, among others, introduces the first round of reforms to strengthen financial sector resilience against climate-related risks. This will lay down strong foundations for a more stable, less bank-centric and more inclusive financial sector that is better positioned to mobilize private investment and support real economic activity,” said Peter Mousley, World Bank task team leader for the project.