IFC AND GLOBAL IME BANK: Partnership For Cause

Under the leadership of Chandra Prasad Dhakal, President of Federation of Nepalese Chamber of Commerce and Industry (FNCCI), Global IME Bank is the first private sector bank in Nepal to be selected by the International Finance Corporation (IFC), a member of the World Bank Group. With the largest network in all of Nepal, IFC's $56 million investment in Global IME Bank to strengthen gender and climate finance in Nepal is likely to bring a drastic change.

Feb. 12, 2024, 11:47 a.m. Published in Magazine Issue: VOL. 17, No. 13, February.09,2024 (Magh,26. 2080) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

Chandra Prasad Dhakal, the bank's founder, has always dreamed of making Global IME Bank a global brand to invest in Nepal's economic development and the prosperity of small and micro enterprises.

Dhakal, who was born in the remote areas of Baglung and started his venture from a small business, understands the difficulties of small and medium enterprises (SMEs) to get the finance for establishment and expansion.

As Global IME Bank has been one of the commercial banks of Nepal focusing on providing loans to SMEs, particularly women-led businesses, IFC's investment in the bank will have a drastic impact in expanding SMEs and promoting climate-friendly projects.

Despite the efforts of Nepal Rastra Bank to increase the number of women-led SMEs in Nepal, the number of women-led SMEs is very low especially in the rural parts of the country.

As Babacar S. Faye, Resident Representative, IFC Nepal and Ratna Raj Bajracharya, Chief Executive Officer of Global IME Bank share the agreement in the presence of Martin Holtmann, IFC's Country Manager for Nepal, Bangladesh and Bhutan, Dr. Neelam Dhungana Timsina, Acting Governor of Nepal Rastra Bank and Dhakal, the Bank's Chairman, Global IME Bank sets a new record as the first commercial bank in Nepal to receive funding from IFC.

For Dhakal, it is a great moment to see his bank branded globally. With an experienced and respected CEO at his side, Dhakal's Global IME Bank will have a solid foundation to use the financing in the interest of women-led SMEs in climate-friendly sectors.

To improve access to finance for smaller businesses in Nepal, including women-owned enterprises, and to promote climate-friendly projects, IFC is investing $56 million in Global IME Bank Limited (GIBL), the country's largest commercial bank. The goal is to increase the bank's competitiveness in the small and medium enterprise (SME) finance market, while improving financial inclusion, creating jobs, and supporting the country's climate change goals.

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IFC's largest investment in Nepal's financial sector will enable GIBL to support the SME segment and help businesses recover from the effects of the COVID-19 pandemic, particularly women-owned SMEs and those in rural areas. IFC's financing will also contribute to climate change mitigation efforts in Nepal by increasing access to climate finance in several areas, including clean transport, climate-smart agriculture, and solar projects.

Fifty percent of the loan proceeds will be split equally between climate and gender financing for the bank's SME and retail clients. The remaining 50 percent will be used exclusively for on-lending to SMEs in the country. This is the first time a development finance institution has provided gender finance to a bank in Nepal.

"We are delighted to receive the continued strategic support of IFC, which not only gives us strength and confidence, but also a mileage to stand tall among peer institutions as well as internationally," said Chandra Prasad Dhakal, Chairman of Global IME Bank Limited. "As the bank has a nationwide network, we will use the available resources to finance the women-owned SMEs."

SMEs generate 22 percent of GDP and employ nearly two million people. Yet access to finance remains a major constraint for 44 percent of SMEs, with the SME financing gap estimated at $3.6 billion.

The situation is even worse for WSMEs, 52 percent of which have limited access to finance. Furthermore, Nepal is ranked as the 10th most vulnerable country to climate change by the Global Climate Risk Index (2021), making climate finance critical to Nepal's goal of net zero emissions by 2045. "Our bank currently has 4.5 million depositors, which is a significant achievement considering we started with no business, no seed capital, and had to take care of our families," said Chairman Dhakal.

Dhakal believes he can do even more. Creating an organization that provides many types of jobs and pays taxes to the government is possible even without a foundation, as long as there is an environment. Dhakal said that Global IME, despite being the 19th largest bank, paid the highest income tax. This is a matter of pride for us.

Dr. Neelam Dhungana Timsina, Acting Governor of Nepal Rastra Bank, said that NRB is more than happy to welcome foreign investment in Nepal. Dhungana said that foreign capital is the catalyst for the development of Nepal and NRB is ready to provide necessary support in this regard.

"As the world becomes increasingly aware of the impact of business on climate and environment, this loan agreement reinforces our commitment to sustainability through climate and gender finance. Recognizing Nepal's potential in green energy development, our commitment extends to bridging the resource gap in the energy sector. In addition, our initiative aims to address gender inequality by providing financial support for the economic empowerment of women in rural Nepal. We are grateful to partner with IFC in this endeavor," said Ratna Raj Bajracharya, Chief Executive Officer of Global IME Bank.

IFC will also help GIBL establish its climate and gender finance business lines and assist the bank in developing a risk management framework.

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"One of IFC's strategic priorities in Nepal is to support financial inclusion and financial sector stability. Accordingly, this investment aims to strengthen the nascent gender and climate finance markets and catalyze more private sector financing for climate-smart assets and WSMEs," said Martin Holtmann, IFC Country Manager for Nepal, Bangladesh, and Bhutan. "IFC's targeted allocation aims to empower more women in the country, while creating jobs and strengthening climate and economic resilience."

Babacar S. Faye, Resident Representative, IFC Nepal, said IFC's investment will help Nepal's SMEs access financing.

This is the third partnership between IFC and GIBL. In 2022, IFC extended a trade finance facility under its Global Trade Finance Program (GTFP), which included a special provision for green trade finance. At the time, it was IFC's first global green trade finance line.

Global IME Bank

Established 17 years ago to provide financial services in the country, Global IME Bank aims to be a leader in Nepal's financial sector and has the largest network in the country.

Currently, Global IME Bank is a comprehensive financial institution consisting of 21 banks and financial institutions, including 5 commercial banks, 10 development banks and 6 finance companies. Reconciling the interests of 21 presidents, 21 CEOs and 7 boards of 21 organizations and management is not an easy task.

Global IME Bank, the largest commercial bank in Nepal, is a global brand working locally.

With representative offices in the United Kingdom, Delhi and Australia, we have also opened a branch in Korea after receiving approval from the National Bank. It is important to note that Nepal's problem is not the lack of a credit rating. The country rating process has progressed as expected. In addition, there is a plan to expand internationally.

The bank is committed to growth, as evidenced by its "Vision-2025" strategic plan, which aims to double its business through the skillful use of modern technology and digitalization. This forward-looking approach positions Global IME Bank not only as a financial institution, but also as a key player in driving innovation and efficiency within the banking sector.

Global IME Bank has an extensive reach across Nepal and beyond. It has consolidated its nationwide presence with a network of 355 branches, 377 ATMs, 274 branchless units and 65 extension counters covering all 77 districts of Nepal. This network ensures accessibility to customers from urban centers to remote regions, contributing to financial inclusion and economic development.

As the saying goes, commitment unlocks the doors of imagination, enables vision, and gives us the right stuff to make our dream a reality. Dhakal's commitment is coming true.

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