KATHMANDU, NEPAL - The Asian Development Bank (ADB) today signed trade financing agreements with eight banks in Nepal. The agreements are aimed at promoting international trade in the landlocked South Asian nation and helping Nepali banks forge alliances with banks overseas.
ADB signed the agreements in the Nepali capital with Bank of Kathmandu Ltd., Everest Bank Ltd., Himalayan Bank Ltd., Kumari Bank Ltd., Nabil Bank Ltd., Nepal SBI Bank Ltd., Nepal Industrial and Commercial Bank Ltd., and Nepal Investment Bank Ltd. They are ADB's first such agreements with Nepali banks.
"Boosting trade is critical to helping Nepal overcome the current global crisis that has hurt exports and may slow the growth in remittances this year and in 2010. In the longer run, increased trade should also lead to crucial job creation and reduced poverty," said Barry Hitchcock, ADB's Country Director for Nepal.
The agreements are part of ADB's Trade Finance Facilitation Program (TFFP). The program, expanded to $1 billion in March, provides guarantees and loans of up to three years to support trade transactions in its developing member countries.
Exporters and importers in the less-developed parts of Asia have struggled for some time to obtain trade finance because of broad risk aversion but this became even more difficult following the onset of the global economic crisis as large international banks refrained from offering such financing in favor of building up their capital base.
Trade is widely acknowledged as a key tool for economic growth and poverty reduction but the TFFP also helps support the banking sector in ADB's developing member countries.
"We are very pleased to extend the reach of the program to Nepali banks which should benefit from increased partnerships with international banks," said Philip Erquiaga, Director General of ADB's Private Sector Operations Department, which oversees the TFFP. "Such relationships can result in expanded trade finance links and facilitate knowledge and technology transfer."