Access to bank loans: Challenges for small entrepreneurs in Nepal « Khabarhub
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Access to bank loans: Challenges for small entrepreneurs in Nepal


28 November 2023  

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KATHMANDU: Despite 98 percent of small entrepreneurs and businessmen engaging in banking transactions, only 56 percent of them manage to secure loans from the banking system, a recent World Bank survey reveals.

The survey highlights a stark contrast in credit accessibility between small and large entrepreneurs in Nepal. While almost all small entrepreneurs (98 percent) have deposit or current accounts in banks, a significantly lower percentage (56 percent) possess a loan account.

In contrast, all major entrepreneurs or businessmen maintain deposit or current accounts in banks, with 98 percent successfully securing loans. Among middle-tier entrepreneurs, while all have banking accounts, only 65 percent have managed to obtain loans.

The survey emphasizes, “Efficient financial markets diminish the reliance of credit-worthy investors and borrowers on internal or informal sources such as family and friends.”

Despite limited credit access for small enterprises, Nepal exhibits relatively robust banking resource availability for investments compared to other nations. The survey highlights that while 13 percent of enterprises in South Asia access bank loans, in Nepal, this figure stands at 21 percent. Even in low-income countries, 13 percent of enterprises rely on bank loans for essential capital.

Within Nepal, 71 percent of enterprises use their own capital or augment their investments from profits. The remaining entities source capital from diverse channels.

The survey categorizes industries employing 5 to 9 individuals as small, those with 20 to 99 employees as medium, and those with over 100 employees as large.

The study engaged 301 (51 percent) small enterprises and businesses, along with 189 medium and 92 large enterprises or businesses.

 

Publish Date : 28 November 2023 16:02 PM

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