Kathmandu. With the aim of promoting the private sector in developing countries, the International Finance Corporation (IFC) has started giving priority to credit investment in the local currency. Since the policy of lending and financial facilitation in local currency was introduced in the early 2000s, Nepali entrepreneurs and businessmen have also been able to take initiative for such facilities. <\/p>\n
At present, especially in the context of the increase in the value of the US dollar, the domestic borrowers are compelled to bear unnecessary financial burden due to the increase in the exchange rate compared to the return. If the loan facility is being availed in the domestic currency or the loan facility that is already being used will be converted into Nepali currency, the businessmen will get direct benefit. <\/p>\n
Recently, private sector airline Yeti Airlines Limited has taken a far-sighted decision to convert foreign currency debt into Nepali currency to avoid exchange rate risk. This decision will immediately lead to a high exchange rate deficit on the balance sheet, but it will have a positive impact on profitability in the near future. IFC has also introduced the concept of investing in local currency for the private sector to keep the exchange rate risk free. <\/p>\n
The main objective of this policy is to address the obligation of local businesses to bear significant financial risks from exchange rate fluctuations when borrowing foreign debt in US dollars or other strong currencies. So far, IFC has disbursed investments in more than 70 local currencies to more than 70 emerging and developing countries around the world, including India, Brazil, Colombia, Nigeria, Indonesia and Vietnam. <\/p>\n
The main objective of investing in the local currency is to keep the borrowers free from exchange risk, to bring long-term capital within the reach of small and medium enterprises, and to sustainably develop the internal capital market and bond market of the country concerned. <\/p>\n
In the context of a developing country like Nepal, IFC’s local currency investment policy can prove to be a great boon for Nepali entrepreneurs. The financial burden and risk of loss due to the increase in the value of the dollar when a businessman earning in Nepali rupees pays a loan in US dollars is completely removed when he gets access to the financial in the local currency. <\/p>\n
IFC will increase the liquidity of the banks by issuing Nepalese rupee bonds or investing in the local currency through banks. This will enable small and medium enterprises, women entrepreneurs and green energy projects to get long-term capital without exchange risk. <\/p>\n
IFC, which has been a long-standing partner in the development and infrastructure development of the private sector in Nepal, has increased its total investment commitment to more than US$ 800 million in Nepal by the end of 2025. Out of this, more than US$ 600 million has been disbursed in loans to the banks and financial institutions, hydropower projects and infrastructure sectors, while equity investments of 50 to 70 million US dollars are being made in the share participation of hydropower, financial institutions and private companies. <\/p>\n
The Upper Trishuli Hydropower Project with a capacity generating capacity of 216 MW is the largest and historic among the major loans made by IFC to the private sector of Nepal, with IFC raising more than $450 million on its own and through partners. <\/p>\n
In addition, the bank has provided $55 million loan to Global IME Bank, Nabil Bank, NIMB and Laxmi Sunrise Bank for small industries, climate finance and international trade facilitation. <\/p>\n
IFC has been contributing to the development of the private sector of Nepal by providing significant loan investment in the infrastructure development like Kathmandu Marriott and Chhaya Center in the tourism and service sectors.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. With the aim of promoting the private sector in developing countries, the International Finance Corporation (IFC) has started giving priority to credit investment in the local currency. Since the policy of lending and financial facilitation in local currency was introduced in the early 2000s, Nepali entrepreneurs and businessmen have also been able to take […]<\/p>\n","protected":false},"author":5,"featured_media":275619,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45117,45031,45044,45159],"tags":[],"class_list":["post-320642","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-finance-en","category-banner-news-en","category-international-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/320642","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=320642"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/320642\/revisions"}],"predecessor-version":[{"id":320643,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/320642\/revisions\/320643"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/275619"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=320642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=320642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=320642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}