RBB Introduces Credit Guarantee Facility for Startup Loans Through Tripartite Agreement

30th December 2025, Kathmandu

In a landmark move to bolster Nepal’s entrepreneurial ecosystem, Rastriya Banijya Bank Limited has officially launched a credit guarantee facility for startup loans. This initiative was formalized through a tripartite agreement between the Deposit and Credit Guarantee Fund, the Industrial Enterprise Development Institute, and Rastriya Banijya Bank.

RBB Credit Guarantee Facility

The signing ceremony, held at the Ministry of Industry, Commerce and Supplies, represents a significant policy shift aimed at making capital accessible to innovation-driven businesses. By providing institutional risk mitigation, the agreement encourages the state-owned commercial bank to extend credit to early-stage enterprises that often lack traditional collateral. This development is expected to catalyze a new wave of startups across diverse sectors, fostering economic growth and self-employment among the youth of Nepal.

UNDERSTANDING THE TRIPARTITE AGREEMENT FRAMEWORK

The core of this initiative lies in the collaboration between three critical institutional pillars. The Deposit and Credit Guarantee Fund provides the operational mechanism for risk sharing, while the Industrial Enterprise Development Institute is responsible for establishing the dedicated fund within government budget limits. Rastriya Banijya Bank serves as the primary lending arm that interacts directly with entrepreneurs. The agreement was signed by the heads of these respective organizations—Ramesh Ghimire for DCGF, Umesh Kumar Gupta for IEDI, and Devendra Raman Khanal for RBB. This synergy ensures that the financial risks of lending to high-potential but high-risk startups are distributed across the government-backed guarantee system.

KEY FINANCIAL TERMS: LOAN SIZE, INTEREST, AND TENURE

One of the most attractive features of the new startup loan facility is its high degree of affordability. The loans are designed to be accessible even for small-scale innovators, with amounts ranging from a minimum of 500,000 to 600,000 rupees up to a maximum of 2 to 2.5 million rupees per entrepreneur. To ensure that these startups have a fair chance at survival during their initial years, the interest rates are kept exceptionally low, between 3 percent and 5 percent per annum. Furthermore, the repayment tenure is extended up to 5 to 6 years, providing a comfortable buffer for businesses to stabilize their cash flows before they are required to settle the full debt.

TARGETING INNOVATION ACROSS PRIORITY SECTORS

The startup loan program is not just about general lending; it is specifically targeted at businesses that demonstrate innovation and use new technologies. The facility covers 19 sub-sectors categorized into five major priority areas. These include agriculture, forestry, and manufacturing, which are vital for national self-sufficiency. Additionally, sectors like information technology and digital services are prioritized to support the growing digital economy. Infrastructure, transportation, social services, tourism, and indigenous resource-based industries also fall under the eligibility criteria. This broad sectoral approach ensures that entrepreneurs from both urban centers and rural villages can find financial support for their creative business models.

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THE ROLE OF CREDIT GUARANTEE IN RISK MITIGATION

For many commercial banks, the lack of collateral is the biggest hurdle in lending to startups. The Startup Enterprise Credit Guarantee Program solves this problem by providing a formal guarantee for the loans disbursed by Rastriya Banijya Bank. If a startup project fails due to legitimate business risks, the guarantee fund covers a significant portion of the loss, thereby protecting the bank’s financial position. This mechanism shifts the focus of lending from “collateral-based” to “project-based,” allowing bankers to evaluate a startup based on its business plan, innovation potential, and market feasibility rather than the value of the entrepreneur’s land or buildings.

ECONOMIC IMPACT AND EMPLOYEE GENERATION

The long-term goal of this tripartite agreement is to stimulate the private sector and create large-scale employment opportunities. Startups are often more labor-intensive and innovative than traditional large corporations, making them ideal drivers for economic diversification. By providing collateral-free or low-risk financing, the government is essentially betting on the talent of the youth. This policy is expected to reduce the brain drain by encouraging skilled graduates to start their own ventures in Nepal. Moreover, the successful implementation of this program could serve as a model for other private commercial banks to participate in similar public-private financing mechanisms in the future.

PROCEDURAL GUIDELINES AND COMPLIANCE

Eligible entrepreneurs wishing to access this facility must follow the Startup Enterprise Loan Operation Guidelines approved by the Government of Nepal. The application process involves presenting a detailed business plan that highlights the innovative aspects of the project. Rastriya Banijya Bank, in coordination with IEDI, will assess these applications for their viability. Once a loan is approved and disbursed, it is automatically covered under the guarantee program managed by DCGF. This structured approach ensures that the funds are utilized for genuine entrepreneurial purposes and that the system remains transparent and accountable to the national auditors and regulatory bodies.

CONCLUSION AND NEXT STEPS FOR ENTREPRENEURS

In conclusion, the introduction of the credit guarantee facility for startup loans through Rastriya Banijya Bank marks a transformative moment for Nepal’s financial landscape. By combining concessional interest rates, long repayment periods, and institutional risk coverage, the government has addressed the most persistent barrier to entrepreneurship—access to capital. This initiative not only provides immediate financial relief but also builds a foundation for a more resilient and innovation-driven economy. Aspiring entrepreneurs are encouraged to finalize their business plans and engage with the bank to take advantage of this unique opportunity.

For More: RBB Credit Guarantee Facility