June 26, 2023, Kathmandu, Nepal – The Global Green Growth Institute (GGGI), an international inter-governmental organization and Laxmi Bank Limited, a leading private bank in Nepal, have signed a Memorandum of Understanding (MoU) to collaborate on the implementation of the Terai Agribusiness and Enterprise Challenge Fund (TAECF) under the KOICA-GGGI Climate Smart Agriculture project. The MoU formalizes the framework of cooperation between GGGI and Laxmi Bank to facilitate access to finance by grantees selected for the TAECF.
Under the TAECF, GGGI aims to support micro and small enterprises to expand and broaden their product range and services in the agriculture sector. In this regard, GGGI plans to disburse USD 1.56 million as grants over a 3-year period from 2023. GGGI will disburse grants amounting to 70%, 60% and 50% of the total proposed budget in the first, second, and third year, respectively. Grantees should contribute the balance in the form of equity and/or bank financing.
Acting as a partner bank for GGGI’s TAECF, Laxmi Bank Limited will provide financial support in the form of loans to the grantees approved by GGGI. The loans will help strengthen the overall agriculture value chain, including input suppliers, farmers, collectors, millers, and traders, in addressing challenges in the agriculture sector in the Madhesh Province. The loan size will be capped at NPR 0.5 million per enterprise, with a maximum portfolio size of NPR 100 million.
“In Nepal, access to financial services is crucial to build farmers’ resilience. However, due to barriers such as low literacy levels, distance from banks, banking fees, and insufficient collateral, many farmers are unable to access formal banks,” Dr. Lasse Ringius, GGGI’s Nepal Country Representative said. “Through a partnership with Laxmi Bank, GGGI CSA projects intend to reach the underserved and provide agriculture-specific loans in combination with grants. Farmers in the Terai region need finance to grow, scale up, and strengthen their businesses and increase productivity. The TAECF will support micro and small agribusinesses to create green jobs and long-term resilient green growth in the agriculture sector,” Dr Ringius, added.
“Today, we are signing an MoU to officially solidify our alliance and dedication to collaborate towards our common objectives of alleviating poverty through enhanced financial access, while addressing the challenges related to climate change in the field of agribusiness. We are confident that through our joint efforts, we can capitalize on our individual strengths and knowledge to bring about tangible improvements in the lives of individuals residing in the project districts,” said Mr. Dipesh Amatya, Chief-Retail Financial Services of Laxmi Bank.
About Terai Agribusiness and Enterprise Challenge Fund (TAECF)
The TAECS is a major component of the KOICA-GGGI CSA project. The Fund provides matching grants through a competitive bidding process where the best applicants are selected. The grant will be provided to 60 agribusinesses in the first year under the incubation program. Based on performance some of these agribusinesses will also be supported in the second and third years under the Acceleration and Championship program. The objective of the TAECF is to support micro and small enterprises to expand and broaden their products and services, and delivery channels, particularly in the agriculture value chains. More information on the TAECF can be found here
About Laxmi Bank Limited
Laxmi Bank Limited is a bank duly registered under Companies Act 2063 (with amendments) operating under Banks & Financial Institutions Act 2073; having its registered office at Hattisar, Kathmandu Nepal. Laxmi Bank was established in 2002 as the 16th commercial bank in Nepal. Today, through its branches and a host of IT enabled channels, the Bank serves a wide range of customers. Despite a relatively short history, Laxmi Bank has emerged as a major player across all business lines – retail, midmarket, corporate, infrastructure and treasury. More information on Laxmi Bank can be found on www.laxmibank.com.
