Nepal’s Banking Sector Under Stress: How the Gen Z Movement Sparked a Surge in Bad Loans
Summary
Nepal's banking sector faces rising stress as the Gen Z movement triggers a surge in bad loans, impacting SMEs and slowing loan recovery amid economic fragility.
Key Points
- Nepal's inflation cooled to 1.11% year-on-year by mid-November 2025, but banking sector stress is rising due to cashflow disruptions.
- The Gen Z movement triggered protests in September that caused economic losses over $586 million and significant physical damage.
- Non-performing loan ratios increased to 5.03% in commercial banks by mid-November, crossing a critical threshold that tightens credit conditions.
- A government-Gen Z 10-point agreement aims to restore stability, but banking sector recovery depends on rebuilding confidence and credit discipline.
