38761 - WCS - NIC Asia Bank Nepal

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Summary of Investment Information

Project Number

38761

Company Name

NIC ASIA BANK LIMITED

Date SPI Disclosed

May 28, 2019

Country

Nepal

Region

South Asia

Projected Board Date

Aug 16, 2019

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The proposed project consists of a senior loan of up to $10 million to be extended to NIC Asia Bank (the “Bank”). The project will provide funding to the Bank to support the working capital needs of its clients, especially Small and Medium Enterprise (“SME”) clients in key sectors within Nepal’s economy.

Sponsor / Cost / Location

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

The Project is expected to increase access to working capital financing for SMEs in Nepal, which suffer from a significant gap between the current supply of finance and their demand for credit. Working capital is necessary for SMEs to finance their daily business operations, source supplies and pay employees. SME growth ultimately facilitates business growth, job creation and income generation, especially in key productive sectors of the Nepalese economy. The financing will also support key industries, as the ultimate recipients of funds would include buyers of raw materials, processors and manufacturers that support growth.

1. Long term funding: The project will be the first of its kind in Nepalese financial sector to enable local banks to access USD resources beyond 12 months. Facing an environment where liquidity shortages are prevalent and frequent, the Bank will be able to secure stable funding that will help them meet the credit demand in the market. 2. Stamp of Approval: IFC's financing will send a market signal to international banks and other financial institutions that may be reluctant to enter Nepal due to reservations about regulatory uncertainty and sovereign risk. As such, IFC's lending may increase the possibility for additional financing to be provided by external third parties.

E&S Category Rationale / Risks and Mitigation

The project consists of a short term roll over facility to NIC Asia bank to provide on lending facilities to micro, small and medium enterprises engaged in tourism, agriculture, micro finance and small cottage industry sectors, as defined in the priority sector guidelines by Nepal Rashtra Bank. The proceeds from IFC project will not be used to support any coal-related activities, or higher risk business activities that may include significant Occupational Health and Safety risks or impacts on the environment, community health and safety, biodiversity, cultural heritage, involuntary resettlement or risk of adverse impacts on Indigenous Peoples. Overall, the project presents low E&S risks and impacts and therefore categorized as FI-3. The applicable performance requirements will include the IFC- FI Exclusion List and applicable national laws. The bank's HR policies and procedures are in line with the requirements of IFC PS-2 (Labour and working conditions).

Contacts

For Inquiries About the Project, Contact

NIC Asia Bank Limited
Bimal Lamsal
Head - Treasury
+977-5111181/82
bimal.lamsal@nicasiabank.com
Trade Tower, Thapathali, Kathmandu, Nepal
www.nicasiabank.com

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