Siddhartha Bank Inks $40 Million Risk-Sharing Deal with IFC

Siddhartha Bank Limited has signed an agreement with the International Finance Corporation (IFC) for a risk-sharing facility worth $40 million aimed at expanding credit to micro, small, and medium enterprises (MSMEs) across Nepal.

Under the arrangement, executed as part of the World Bank Group private-sector arm's Small Loan Guarantee Program, the IFC will shoulder 50 percent of the credit default risk on Siddhartha Bank's lending to MSMEs. Corporate Nepal, Annapurna Post, and Setopati reported that the transaction represents the IFC's inaugural risk-sharing partnership within Nepal.

Rameshwar Prasad Basyal, the chief executive officer of Siddhartha Bank, stated that the arrangement is expected to reinforce the commercial lender's underwriting capacity amid a difficult domestic macroeconomic climate. He noted that the initiative aims to maintain disciplined credit metrics while broadening access to financing, fostering entrepreneurship, and creating employment to support inclusive economic expansion, according to reporting by Kendrabindu and Setopati.

The commercial facility marks another step in a ten-year relationship between the Nepali lender and the multilateral financier. Corporate Nepal and Annapurna Post noted that Siddhartha Bank initially joined the IFC's Global Trade Finance Program in 2014, gaining wider access to international correspondent banking networks.

In 2023, Siddhartha Bank secured a $55 million syndicated loan facility through the IFC, representing Nepal's first and largest foreign-currency syndicated borrowing within the domestic financial sector, according to coverage by Kendrabindu, Corporate Nepal, and Setopati.

Alongside direct financing and risk-guarantee mechanisms, the private commercial lender has engaged with the IFC through institutional advisory partnerships. The multilateral institution provides technical assistance to build internal capacity in digital banking, environmental and climate finance, gender-focused financial products, and portfolio risk management.