SBL Nepal SME (IFC-47324)

Countries
  • Nepal
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Proposed
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
B
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Feb 10, 2023
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
SIDDHARTHA BANK LIMITED
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Finance
  • Industry and Trade
The service or industry focus of the investment. A project can have several sectors.
Potential Rights Impacts
  • Healthy Environment
  • Labor & Livelihood
Only for projects receiving a detailed analysis, a broad category of human and environmental rights and frequently at-risk populations.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 55.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Feb 6, 2023

Disclosed by Bank Jan 10, 2023

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

According to the IFC, the proposed investment comprises of a US$ 55 million investment through a 3-year USD denominated senior loan to Siddhartha Bank (SBL), to be used exclusively for on-lending to small and medium enterprises (SMEs) in Nepal (the Project) with US$ 5.5 million carveout for green financing. Of the US$ 55 million, US$ 25 million will be through mobilization.


SBL is a fast-growing commercial bank with a strong retail and small and medium enterprise segment. The shortage of liquidity in the financial sector is inherent in Nepal, and the business operations and economic activities of SMEs have been hampered by the COVID-19 pandemic. The proposed facility will assist SBL to further extend capital to the small and medium enterprise segment and contribute to improving liquidity in the financial sector and support the fast recovery of SMEs impacted by the COVID-19 pandemic, including the underserved rural SMEs. SBL is Nepal’s 6th largest bank in terms of total assets and has grown organically every year in ranking, size and profitability. 

Early Warning System Project Analysis
For a project with severe or irreversible impacts to local community and natural resources, the Early Warning System Team may conduct a thorough analysis regarding its potential impacts to human and environmental rights.

IFC RISK RATING: F1-2

SBL's SME portfolio mainly comprises businesses engaged in wholesale/retail trading, agribusiness, small scale manufacturing, and small and medium sized construction companies engaged in commercial and residential projects. These industry sectors in SME segment, present medium-low Environmental & Social risks and impacts which are readily manageable. The typical risks areas include labor and working conditions, occupational health and safety, supply chain risk including child labor and biodiversity risks in the agribusiness, air emissions, waste management, and handling of hazardous materials, in the SME borrower's operations.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.

The project involves a 3 year senior loan of US$30 million from IFC’s own account and a 3 year senior syndicated loan of US$12.5 million, and another 3 year senior loan of US$12.5 million from IFC acting in its capacity as implementing entity for the Managed Co-Lending Portfolio Program (MCPP).

The project is intended to be used exclusively for on-lending to small and medium enterprises (SMEs) in Nepal with a carveout for green financing.

                    

Financial Intermediary
A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.
Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

Siddhartha Bank is listed on the Nepal Stock Exchange and has over 125 million listed shares. The promoter group owns 51% of the bank’s shareholding. The remaining 49% shares are held by the public.         


For the year ended 16 July 2022, the Bank reported total assets of US$2,033 million, loan book of US$1,424 million, net worth of US$168 million and deposits of US$1,473 million. The Bank has robust asset quality (with a gross non-performing assets ratio of 1.03%) and healthy profitability with return on total assets of 1.31% and return on equity of 15.22%. SBL is rated BBB+ by ICRA.
Siddhartha Bank is headquartered in Kathmandu, the capital city of Nepal.

Private Actor 1 Private Actor 1 Role Private Actor 1 Sector Relation Private Actor 2 Private Actor 2 Role Private Actor 2 Sector
- - - - Siddhartha Bank Client -

Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

IFC's Contacts:

General IFC Inquiries
IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Borrower's Contacts:

Siddhartha Bank Limited
Shishir Hari Rajbhandari
Manager Treasury and Correspondent Banking
+977 1 4442920
shishir.rajbhandari@sbl.com.np
Hattisar, Kathmandu, Nepal
https://www.siddharthabank.com/

ACCESS TO INFORMATION

You can submit a request for information disclosure at: https://disclosures.ifc.org/#/inquiries

If you believe that your request for information from IFC has been unreasonably denied, or that this Policy has been interpreted incorrectly, you can submit a complaint at the link above to IFC's Access to Information Policy Advisor, who reports directly to IFC's Executive Vice President.

ACCOUNTABILITY MECHANISM OF IFC/MIGA

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org

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