Siddhartha Bank and UKaid Sakchyam Launch Partnership to Deliver Better Access to Finance to MSMEs

July 11, 2019

Kathmandu: At an event held on July 5, UKaid Sakchyam Access to Finance Programme and Siddhartha Bank Limited launched their partnership to cater to the financing needs of Micro, Small and Medium Enterprises (MSMEs) across the country through an innovative and sustainable approach. The agreement certificates were signed and exchanged by Shambhu Nath Gautam, CEO, Siddhartha Bank Limited (SBL) and Nirmal Dahal, Team Leader of Sakchyam amidst the media and senior management of both the organizations.

Addressing those present at the event, Gautam said that the collaboration would create a platform to deliver complete financial solutions to MSMEs, a segment that has an important role in the economic growth of the developing countries. The bank intends to restructure the business model, customize products, services and delivery mechanism to best suit the target segment.

Dahal pointed out how the recent ‘Nepal Economic Census’ has shown that a large portion of small enterprises are out of reach of formal financial institutions and said, “Our partnership with SBL aims to enhance access to finance for SME in general and ‘missing middle’ or micro-small enterprises in particular. Changing this scenario would require banks to overhaul their operation, reengineer processes and utilize data-backed and technological solutions for effective and efficient decision making and this partnership is formed along the same line.”

The MSMEs are termed as ‘missing middle’ as the segment’s financial needs are considered too big for microfinance institutions and too small for corporate banking model. Also, the segment has been termed high-risk borrowers by FIs and they lack both reliable financial statements and adequate and/or acceptable collateral. To make the credit and other financial services easily accessible to people from the low-income group to establish or expand their business, the project will follow innovative approaches towards reengineering products/process, allocate dedicated resources, define clear parameters for the segment and use technology to enhance the operation of the SME banking.