Sustainable economic development in rural and semi-urban areas - MSME financing phase III

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The aim of the FC module is the sustainable provision and use of a needs-based loan offer by micro, small and medium-sized enterprises (MSMEs) operating primarily in rural and semi-urban areas for business investments (working capital and fixed asset investments). By better tailoring the financing offer to the needs of rural and semi-urban MSMEs, the FC module contributes to the overarching development policy goal of an improved entrepreneurial environment for sustainable and socially balanced economic development in Nepal. The indirect target group is MSMEs operating primarily in rural and semi-urban areas (including cooperatives and sole proprietors), who receive improved access to a needs-based loan offer through the additional refinancing and MSME-specific products. The immediate target group is selected Nepalese commercial and development banks that provide financial services for MSMEs and whose capacities and activities in the field of rural MSME financing are strengthened. The total FC contribution amounts to EUR 8.5 million in grants. EUR 7.0 million in FC grants will be provided in the form of a long-term loan for the refinancing of the MSME loan portfolio from two partner financial institutions and EUR 1.5 million in FC grants for an accompanying measure. The accompanying measure is intended to strengthen the capacities and know-how of the PFIs and MSMEs (especially in the area of financial literacy). In addition, the Nepalese central bank Nepal Rastra Bank (NRB) is to be supported in setting up and managing a revolving fund for MSME financing.