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Selection and due diligence of financial institutions

Project Details

CLIENT

KfW

YEAR

2016-2017

COUNTRY / REGION

Nepal / South, Southeast & East Asia

EXPERTISE

Banking & SME Finance

Inclusive Finance

KEY TOPICS

Due Diligence

Microfinance

CONTACT

Marga Scheck

The German and Nepali governments have agreed on the allocation of EUR 7 million to the Ministry of Finance for onlending through Central Bank of Nepal – Nepal Rastra Bank (NRB) to up to three partner financial institutions (PFIs). These funds will be used to provide loans in local currency to (rural) MSMEs. The programme aims for sustainable and targeted expansion of PFI lending to (agricultural) MSMEs in rural Nepal. To support the successful preparation and implementation of the programme, IPC was contracted by KfW to establish and implement a selection process for PFIs.

IPC’s experts implemented the following tasks:

  • preparing a request for proposals document to invite expressions of interest from potential PFIs
  • preparing a financial and risk assessment scheme to evaluate the institutions against eligibility criteria and present to KfW for approval
  • acting as first point of contact for any queries and as collection point for all expressions of interest
  • preparing a report based on the proposals received from financial institutions
  • aggregating a short list of potential PFIs eligible for the second stage
  • conducting due diligence of up to five short-listed financial institutions (including on-site appraisal)
  • reviewing the governance framework for the selected banks and assessing the adequacy of the terms of reference for Board of Director committees
  • assessing the existing mechanisms for asset-liability management and evaluating the integrity of financial reporting controls
  • providing recommendations to NRB and KfW regarding which PFIs should be included in the programme

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