KATHMANDU, April 10: Banks and financial institutions (BFIs) posted a modest rise in private sector lending in the first eight months of the current fiscal year, driven mainly by higher borrowing for consumer goods and share investment.
According to data from Nepal Rastra Bank (NRB), BFIs disbursed Rs 295.35 billion in loans to the private sector as of mid-March 2025—a 5.7 percent rise compared to mid-July 2024. During the same period last fiscal year, lending had increased by 4.2 percent.
The NRB has set a target to increase private sector lending by 12.5 percent in the current fiscal year. The latest report shows that the BFIs have met only half of the target with two-thirds of the set timeline already passed.
Revised interest rate corridor system introduced
The year-on-year growth in the BFIs’ private sector lending stood at 7.7 percent. Out of the total loans issued in the review period, the share of non-financial institutional loans was 63.2 percent, while the remaining 36.8 percent were received by individuals and households.
The BFIs’ loans for imports increased 58.1 percent, the largest of all. Likewise, their margin lending against shares collateral increased by 31.5 percent, overdraft by 12.6 percent and real estate loans increased by 5.95 percent. In the last month alone, the BFIs’ loans against shares increased by Rs 3.39 billion to Rs 118.50 billion.
In the review period, commercial banks were able to increase their loans to the private sector by 6.3 percent, while the credit flow of development banks and finance companies increased by 3.1 percent and 5.7 percent, respectively.
Similarly, the BFIs injected Rs 67.48 billion in consumable loans. This made up 25.43 percent of the issued loans of Rs 295.35 billion. According to bankers, they issued the consumable loans through credit cards and collateral of jewelries, fixed deposits and guarantee bonds.
According to the NRB records, Nepal’s banking system now has loanable funds of Rs 703 billion, while they hold excess liquidity of Rs 250 billion. The BFIs’ interest rate on loans has come down to as low as 8.40 percent and that of deposit to 4.54 percent per annum.
Meanwhile, the non-banking assets of commercial banks increased by 1.07 percent last month after the banks were unable to recover their loans. During the review month, the banks acquired non-banking assets of Rs 76.60 million. With the increment, banks now acquire portfolios of over Rs 36 billion in this category.
