KATHMANDU, Aug 29: Non-banking assets of banks and financial institutions (BFIs) increased by 42.36 percent in the fiscal year (FY) 2024/25, as BFIs were unable to recover a large portion of their loans during the review period.
Records maintained by Nepal Rastra Bank (NRB) show that non-banking assets of BFIs rose by Rs 15 billion between mid-July 2024 and mid-July 2025, increasing from Rs 35.50 billion to Rs 50.55 billion.
Non-banking assets are fixed properties kept as collateral by borrowers, which banks auction off when loans turn into bad debt. Banks can write off the provisioning amount of bad debts using proceeds from the auctioned collateral.
Nepal’s BFIs have only 1.16 percent nonperforming loans, the lo...
The surge in non-banking assets is attributed to BFIs’ inability to recover outstanding loans and interest from their clients. According to the NRB, BFIs’ non-yielding assets rose by Rs 4.85 billion in the last month of FY 2024/25 alone.
Commercial banks alone saw their non-banking assets increase by Rs 12.59 billion in a year, a 41.75 percent rise from Rs 30.17 billion in the previous FY. Among the 20 commercial banks, most recorded a significant increase in such unproductive assets. Global IME Bank had the largest amount at Rs 6.05 billion, up from Rs 5.04 billion.
Himalayan Bank and NIC Asia Bank reported non-banking assets of Rs 5.66 billion and Rs 4.63 billion, respectively, while Machhapuchhre Bank and Siddhartha Bank managed to reduce theirs.
Over the past few years, BFIs have struggled to recover outstanding dues amid a persisting economic slowdown. As a result, the non-performing loan (NPL) ratio also rose to an average of 4.62 percent, up from 3.86 percent in the review period.
The rising number of individuals and entities blacklisted by government authorities for financial crimes further highlights an increase in loan defaults. Of the 53,571 individuals and institutions blacklisted during the review period, 18,801 were related to loan defaults, according to the Credit Information Bureau (CIB).
Citing the excessive surge in NPLs, the International Monetary Fund (IMF) expressed serious concerns last year. The international watchdog emphasized the urgency of addressing the issue to prevent further deterioration in banks' financial positions and to safeguard overall economic stability.
