A Green Finance Boost for Nepal's MSMEs
We are happy to announce a EUR 20 million investment in NMB Bank Limited in Nepal (10 million FMO own funding, 10 million DFCD Land Use Facility). Currently with SNV DFCD origination support, the NMB Bank Ltd develops mechanisms in expanding its climate-resilient investments in Nepal.
Who is NMB Bank Limited? NMB Bank Limited is a prominent "A" class financial institution licensed by Nepal Rastra Bank, the central bank in Nepal. As one of Nepal's largest and most established banks, NMB Bank is dedicated to providing a wide range of banking services to customers across the country. With 49% ownership publicly traded on the Nepal Stock Exchange and 51% held by promotors, NMB Bank Limited is a key player in Nepal's financial landscape. Notably, FMO holds the largest share of 13.69% in the Bank.
What is the Funding Objective? Our partnership, coordinated by FMO, is geared towards empowering Nepal's Micro, Small, and Medium Enterprises (MSMEs) while promoting sustainable, green initiatives. This funding will play a pivotal role in driving the growth of NMB's MSME and green portfolios.
Why are we Funding this Investment? There are three compelling reasons behind our investment in Nepal:
- Reducing Inequalities: FMO is committed to supporting emerging markets like Nepal to reduce disparities within these countries.
- Economic Growth and Job Creation: Financing small and medium enterprises in Nepal aligns with our strategic goal of fostering economic growth and job opportunities.
- Green Financing: By supporting green initiatives in Nepal, we are actively contributing to the reduction of CO2 emissions, aligning with NMB's commitment to sustainable banking practices.
Environmental & Social Categorization and Rationale
The Environmental & Social (E&S) risk category for this endeavor is classified as "A." This classification is attributed to the exposure to high-risk sectors, including hydropower, construction, cement, agriculture, and manufacturing. Operating in a context of high risk, NMB Bank faces challenges such as climate change, ensuring decent work conditions (including addressing the risk of child labor), and combating discriminatory practices against minorities. To address these challenges, NMB has established a dedicated E&S team, implemented an IFC PS-aligned E&S Management System, and developed grievance redress mechanisms for both internal and external stakeholders. Additionally, FMO's financing includes an action plan aimed at strengthening E&S and climate risk management, enhancing stakeholder engagement, and improving implementation capacity.
We are excited about this collaborative effort to support Nepal's economic growth, promote sustainability, and contribute to reducing inequalities. Together, we look forward to achieving meaningful impact in the region. Stay tuned for more updates on this exciting journey!