KATHMANDU, May 13: Private sector lending by banks and financial institutions (BFIs) grew by only 5.7 percent in the first nine months of the current fiscal year (FY), far below the annual target of 12 percent set by Nepal Rastra Bank (NRB).
With just two months remaining until the end of FY 2025/26, BFIs’ lending to the private sector stands at less than half of the target ratio set by the central bank. According to bankers, weak confidence among private sector players amid the economic slowdown has weighed heavily on lending.
As per the NRB’s Current Macroeconomic and Financial Situation Report of Nepal, BFIs extended an additional Rs 311.95 billion between mid-July 2025 and mid-April 2026. With this growth, private sector lending reached Rs 5.809 trillion by the end of the third quarter. In the same period last year, growth was higher at 7.1 percent (Rs 361.03 billion).
NRB likely to miss target of private sector lending this year
Over the past year, BFIs’ loans in bills purchased surged the most, by 41.99 percent. Import loans rose 24.22 percent, while margin loans against shares as collateral climbed 28.49 percent. Conversely, lending in cash credit, real estate, and deprived sector loans recorded negative growth.
Despite sluggish loan issuance, deposit collection surged by 8.5 percent. In the review period, deposits grew by Rs 615.67 billion to Rs 7.879 trillion. Annual growth in deposit collection was recorded at 15.5 percent.
Meanwhile, interest rates have been falling due to banks holding excessive loanable funds. As of mid-April, the average weighted lending rate of commercial banks declined to 6.77 percent from 8.22 percent in the same period last FY.
For development banks, the figure stood at 7.96 percent, down from 9.59 percent. Finance companies saw lending rates fall to 9.26 percent from 10.40 percent.
On the other hand, the weighted interest rate on deposits of commercial banks declined to 3.40 percent from 4.45 percent in one year. Development banks and finance companies recorded interest rate on deposits of 3.77 percent and 4.74 percent, respectively, compared to 5.22 percent and 6.24 percent a year ago.
The base interest rates of commercial banks, development banks and finance companies have also come down to 5.06 percent, 7.36 percent and 7.48 percent respectively from 6.29 percent, 8.34 percent and 9.17 percent recorded in the corresponding period of last year.
