Why Nepal’s banks are drowning in cash but starving for borrowers
Summary
Nepal's banks are experiencing record profits and holding over a trillion rupees in deposits, yet facing rising non-performing loans and slow economic growth, leading to a credit supply-demand mismatch.
Key Points
- Nepal’s commercial banks hold over Rs 7,261.75 billion in deposits but have lent only Rs 5,262.45 billion, creating a large idle cash gap.
- Bank profits increased by 19.62% in fiscal year 2025/26 despite a slowdown in the broader economy to 3.85% growth.
- Non-performing loans in Nepal’s banking sector quadrupled since 2021/22, rising to a gross ratio of 5.6% by April 2026.
- Loan quality issues, macroeconomic slowdown, and a stagnant real estate market contribute to rising bad loans and loan loss provisions.
