British International Investment

NMB Bank Ltd.

South AsiaFinancial services

NMB Bank is one of Nepal’s leading commercial banks, with 201 branches across Nepal. It is licensed as an “A” financial institution by Nepal Rastra Bank and was founded in 1996. It currently serves a range of large and medium-sized business customers.

Our investment

Description of the investment.

In 2018 we provided a $15 million loan to NMB to allow it to grow its lending to key sectors of the Nepalese economy, including infrastructure, agriculture and tourism. This facility was repaid in full on maturity.

In 2022, we followed-up with a senior loan of $25 million to the bank to be directed towards its selected climate finance assets.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact
  • Improve access to reliable, clean and affordable electricity (SDG 7.1, 7.2).
  • Enable economic and employment growth through improved firm productivity (SDG 8.5).
  • Avoid greenhouse gas emissions to support climate change mitigation (SDG 13A).

How?

How?

Finance hydro-power development to i) increase the supply of reliable, renewable and affordable electricity for consumers; ii) increase the supply of reliable electricity to industries, enabling increased productivity, economic output, and employment; and iii) avoid greenhouse gas emissions through the displacement of carbon-intensive energy imports.

Who?

Stakeholder Geography Characteristics
Consumers

Nepal

Expected to service grid-connected urban, peri-urban, and rural residential households.
Firms and their employees

Nepal

Productivity gains likely to be in agriculture (60 per cent), manufacturing (8 per cent), trade (7 per cent), construction (6 per cent), other (19 per cent).
Planet

Global

How much?

Scale Depth/Duration

Projects can meet the equivalent demand of c.300,000 residential consumers.

Expectation to support 50MW generation capacity in the country.

  • 90 per cent of the country has access to electricity. Impact is likely to be deepest for consumers that use more energy; however, reduction in tariffs is unknown.

  • Impact will be deepest for firms and employees in electricity-dependent sectors requiring uninterrupted power supply.

  • Greenhouse gas emissions avoided depends on the extent to which the hydropower will substitute dirty power imports.

Contribution/additionality

Contribution/additionality
  • Financial: Commercial funding is not available in sufficient quantity nor on same terms from commercial sources given the systemic issues of accessing commercial funding in Nepal and the longer-term financing needs for hydro projects.

Risk

External Risk
  • Growth of the climate portfolio may be hampered by the macroeconomic environment or lack of pipeline.
Evidence Risk
  • Not being able to track the ultimate impact (e.g. power generated) as it is likely to occur after the end of our facility given the longer-term nature of hydro projects.
Alignment Risk
  • relates to i) the currency risk given our loan will be in US dollars and the sub-loans in local currency; and ii) the tenor of the facility not matching that of the sub-loans.

Impact score

Impact score (at point of investment)

The Impact Score is a tool to help us manage our performance against our strategic impact objectives. It is designed to incentivise investments that support our productive, sustainable, and inclusive objectives. You can find out more here.

The Impact Score is published for investments made from 2022 onwards. The Impact Scores are calculated at the point of investment. We publish the Impact Scores of new investments annually, once the information has been externally assured by an independent third party.

8

Understanding our impact information (PDF)

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.
  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

We continue working on the ESAP with NMB, including the hiring of additional environmental and social resources and further implementation of a proportionate ESMS.

Understanding our approach to environmental and social risk (PDF)

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to reportsandcomplaints@bii.co.uk or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at enquiries@bii.co.uk

  • Key facts
    Last updated

    When the last quarterly update of the website database occurred.
    :
    June 2024
    Project number

    An identifier number shared by investments in the same project.
    :
    D5504
    Status

    The current status of the investment (green flag for active and red flag for exited).
    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.
    :
    South Asia
    Country

    The countries where the investment delivers impact. Where impact is delivered in multiple countries, this is indicated.
    :
    Nepal
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Financial services

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.
    Investment type :
    Debt
    Start date :
    July 2022
    Amount :
    $25m
    Currency of investment :
    USD
    Domicile

    The company or investment fund’s place of incorporation.
    :
    Nepal
    Climate finance

    Indicates whether the investment is climate finance qualified or partially climate finance qualified and the type of climate finance (adaptation, mitigation or both). We define climate finance using the multilateral development bank (MDB) and the International Development Finance Club (IDFC) Common Principles climate finance methodology. See Common Principles for Climate Mitigation Finance Tracking and Common Principles for Climate Change Adaptation Finance Tracking. We provide the climate finance qualification and type for commitments from 2020 onwards, which is when we launched our Climate Change Strategy.
    :
    Fully qualified
    Climate finance type:
    Mitigation
    2X Gender Finance

    Indicates whether the investment is ‘2X qualified’ using the 2X Challenge criteria. You can find out more here. It only applies to investments made from 2018 onwards, when the 2X Challenge was first launched.
    :
    Partially qualified

    Download as PDF

    Click here to read our data guidance

Related investments made by BII into this company:

Investment name Commitment Region Sector Start date Status
Investment 01 $15m South Asia Financial services November 2018 Exited

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