Nepal Finance for Growth DPC (3 of 3)

The objective of the Third Nepal Finance for Growth Development Policy Credit Program is to support the Government of Nepal in its efforts to strengthen financial sector stability, diversify financial solutions, and increase access to financial services. The third Finance for Growth (F4G3) Development Policy Credit (DPC) will support the Government of Nepal (GoN) in its efforts to strengthen financial sector stability, diversify financial solutions, and increase access to financial services. The F4G3 DPC, in the amount of US80 million dollars equivalent, is the third in a programmatic series of three operations designed to support the country’s transition to the Green, Inclusive and Resilient Development (GRID) pathway, as announced in the Kathmandu Declaration of September 2021. The closing date is April 25, 2025. The proposed F4G3 DPC supports the approach taken by the GoN to return the economy on a post-pandemic recovery path in line with the GRID framework adopted in 2021. Pillar I of the proposed operation promotes resilience by supporting the institutional capacity of the Nepal Rastra Bank (NRB) to oversee the banking sector and by increasing public accountability of the banking sector for climate-related risks. Pillar II opens capital, insurance, and disaster risk markets and fosters financial product innovations. Pillar III extends financial inclusion and improves ease of business-to business and household-to-business transactions. The gender gap in access to digital financial services is addressed via a combination of reforms, specifically targeting women and women entrepreneurs. Climate agenda is fostered through enhancement of supervision of climate-related risk by financial sector regulators and by creating enabling environment for issuance of green financial products in line with the recommendations of the Nepal Country Climate and Development Report (CCDR) (2022).