SME Finance

Small and Medium Enterprises (SMEs) play a vital role in the economic development of a country. SMEs are more adaptable to changing the business environment and creating sustainable employment. Their contribution becomes more important in the case of developing countries like Nepal. However, the establishment and growth of SMEs are hindered by various factors such as lack of skill, financial access, and a sound legal and regulatory environment, among other things. One of the biggest constraints faced by SMEs is the lack of access to financial services that hinder their establishment and growth. Financial Institutions tend to believe that SME lending has poor risk/return ratio due to weak and largely asymmetric information which leads to complexity in underwriting.

To unleash the potential of SMEs in Nepal, the Sakchyam – Access to Finance for the Poor Programme works in partnership with financial institutions, especially commercial banks, and facilitates easy access of innovative new financial products and services to SMEs. The programme provides technical support to financial institutions in rolling out innovative financial products and services (savings, credit, payment and insurance), and in the use of alternative delivery channels to increase the outreach of the financial service provided in far-flung areas. The programme also provides technical assistance to partner financial institutions to help them service the SME sector in a more focused and structured way. These interventions work towards ensuring improved SME finance as banks and other financial institutions provide tailored, suitable and better financial services to SMEs.