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.
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.
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.
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.
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General IFC Inquiries
2121 Pennsylvania Avenue, NW
Washington DC 20433
Siddhartha Bank Limited
Shishir Hari Rajbhandari
Manager Treasury and Correspondent Banking
+977 1 4442920
Hattisar, Kathmandu, Nepal
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