Finnfund and Swedfund invest in Siddhartha Bank to strengthen Nepal’s financial inclusion and financing to renewable energy

Finnfund and Swedfund complete their first direct investment within the Nepalese banking sector by providing a loan of 10 million US dollar each to Siddhartha Bank.

The proceeds of the investment will be used to support the growth of micro, small and medium enterprises (MSMEs), agriculture and agribusiness, and the development of the hydropower sector in Nepal. The investment will also support gender equality and women’s empowerment, with at least 30% of the loan proceeds being allocated to women. The Bank has developed tailor-made products for women entrepreneurs and currently 41% of its clients are women. Together, the Nordic DFIs are able to support Siddhartha Bank in developing its internal processes to address environmental and social issues and to assess and mitigate climate risks and impacts related to its activities.

“There is limited access to long-term funding in Nepal and as a Development Finance Institution, we can also further enhance Siddhartha Bank’s environmental and social governance, as well as impact work, which makes this investment important. The investment is in line with Swedfund’s strategy to strengthen financial inclusion in countries with the lowest income”, says Jane Niedra, Investment Director Financial Inclusion, Swedfund.

MSMEs account for nearly all registered firms in Nepal. By supporting improved access to financing for these, the investment can help Siddhartha Bank contribute to Nepal’s national goals of becoming a mid-income country by 2030 and a developed country by 2043. Nepal exports surplus hydropower to India. As the country has a large trade deficit this is a key development, enabling increased export earnings. Beyond reducing greenhouse gas emissions, strengthening Siddhartha Bank’s capacity to increase lending to the hydropower sector can bolster Nepal’s financial and climate resilience.

“MSMEs are the key pillar of Nepal’s economy, while their access to bank credit has been limited. Another challenge for Nepal’s development is that hydropower potential needs financing. Thanks to our investment, Siddhartha Bank can now grow their loan portfolio in those sectors”, says Ulla-Maija Rantapuska, Finnfund’s Senior Investment Manager.

Siddhartha Bank is one of the largest banks in Nepal, with a network of 196 branches spread across the country including many remote areas. Reaching out to the many unbanked people in remote areas supports financial inclusion in the country: Siddhartha Bank has been positioning itself as a digital first bank for sustainable growth. The Bank has been able to offer digital solutions for majority of engagements with the internal and external customers. The Bank has been promoting MSMEs and productive sector lending in Nepal.

More information:
Senior Investment Manager, Ulla-Maija Rantapuska, tel. +358 41 536 5631,
ulla-maija.rantapuska@finnfund.fi
Investment Director, Jane Niedra, jane.niedra@swedfund.se

Media contact:
Valpuri Mäkinen, Communications and Marketing Manager, tel +358 50 3842105, valpuri.makinen@finnfund.fi

Axel Hallgren, Press and Communications Manager, tel +46 70 234 49 46,
axel.hallgren@swedfund.se

About Siddhartha Bank
Siddhartha Bank was established in 2002 and is one of the largest commercial banks in Nepal. It is headquartered in Kathmandu and is listed on the Nepal Stock Exchange. It has 1970 FTE employees and a wide presence across the country, in total 196 branches and 225 ATMs. Siddhartha’s loan portfolio amounts to USD 1.55 bn and consists of loans to different sectors, such as production, wholesale and retail. For more information, please visit www.siddharthabank.com

About Finnfund
Finnfund is a Finnish development financier and impact investor. Finnfund builds a sustainable future and generate lasting impact by investing in businesses that solve global development challenges. They invest 200–250 million euros in 20–30 companies in developing countries each year. Finnfund’s focus sectors include renewable energy, sustainable forestry, sustainable agriculture, financial institutions, and digital infrastructure and solutions. Today Finnfund’s investments, commitments, and investment decisions total about 1.22 billion euros, half of them in Africa. The company has 100 employees based in Helsinki and Nairobi. For more information, please visit www.finnfund.fi

About Swedfund
Swedfund is Sweden’s development finance institution with the mission to contribute to poverty reduction through sustainable investments in developing countries. Swedfund invests equity, provides loans, or uses the fund instrument in four focus sectors: Energy & Climate, Financial inclusion, Sustainable enterprises, and Food systems. The investments contribute to the creation of jobs with decent labor conditions and increase access to essential products and services such as electricity and digital connection. Swedfund can also use technical feasibility studies, the Project Accelerator, early in the investment cycle to enable the development of more sustainable and bankable projects in the public sector. At the end of 2023, Swedfund had 73 portfolio companies.