Nepal Banking Sector Challenges 2026
Rising bad loans and regulatory changes hit Nepal’s banking sector
What happened
Nepal's banking sector has experienced increasing stress in July 2026, with surging non-performing loans, bonus suspension at major banks, policy reforms, excess liquidity, and efforts to modernize the capital market. Economic factors and regulatory responses are shaping the financial landscape.
Timeline
Bonus Suspension at Five Banks
Jul 23, 05:16Five commercial banks including NIC Asia and Himalayan Bank suspended advance employee bonuses in 2026, pending audits and regulatory approvals amid rising non-performing loans and losses.
Liquidity Management and Budget Implementation
Jul 17, 09:56Nepal Rastra Bank collected Rs 50 billion to manage liquidity; fiscal year 2026/27 budget of Rs 2.12 trillion commenced focusing on macroeconomic stability; NEPSE stock index rose 3.06%.
Non-Performing Loans Triple in Five Years
Jul 17, 09:56Nepal's non-performing loan ratio increased from 1.48% in 2021 to 4.62% by mid-2025, with unrecoverable loans rising and sectors like fishery and construction most affected, indicating financial stress.
10-Year Capital Market Roadmap
Jul 16, 05:28Nepal Securities Board unveiled a plan to double capital market size relative to GDP by 2036, introducing AI, blockchain, new financial instruments, and full digitization including a unified Capital Market Super App.
Excess Liquidity at Rs1.56 Trillion
Jul 16, 00:52Nepal’s banks and financial institutions held Rs 1.56 trillion in excess liquidity due to weak credit demand and slow economic activity, with credit-to-deposit ratio at 71.29%.
NRB Regulatory Changes Announced
Jul 15, 16:11Nepal Rastra Bank announced increased margin lending loan-to-value ratios, extended contractor loan relief, extended working capital deadlines, and eased National ID rules for migrants and children.
Rising Non-Performing Loans and Idle Cash
Jul 13, 18:57Nepal’s banks hold Rs 7,261.75 billion in deposits but lent only Rs 5,262.45 billion; non-performing loans quadrupled since 2021/22, reaching a 5.6% gross ratio by April 2026.
Banking Sector Profits and Liquidity Surplus
Jul 13, 00:59Nepal’s commercial banks reported 19.62% net profit growth amid 3.85% economic growth slowdown, while non-performing loans rose to 5.41% and credit-to-deposit ratio fell to 72.91%.
Dormant Account Reduction Directive
Jul 11, 08:29Nepal Rastra Bank directed banks to reduce dormant accounts by mid-2026, requiring amended regulations and regular customer notifications via phone, SMS, or email.
Loan Limits Increased
Jul 07, 12:46Nepal Rastra Bank increased loan limits for private housing from Rs. 20 million to Rs. 30 million with 80% loan-to-value ratio, and doubled personal overdraft limits from Rs. 5 million to Rs. 10 million to boost consumption.
Monetary Policy Announced
Jul 07, 11:27Nepal Rastra Bank announced its monetary policy targeting 5.5% inflation and 11% credit expansion to the private sector, promoting specialized banking and encouraging digitization of services.
Latest Coverage
Know the Stocks Near 52-Week High and Low: Key Stock to Watch
Jul 23Nepal Stock Exchange recently saw a slight drop but experienced a surge after Prime Minister Balen Shah met with market leaders to support reforms …
sharesansar.com BusinessFive Commercial Banks to Withhold Advance Employee Bonuses This Year
Jul 23Five commercial banks in Nepal, including NIC Asia Bank and Himalayan Bank, will not distribute advance employee bonuses this year, awaiting financial audits and …
sharesansar.com BusinessNepal News Evening Economic Brief – July 17, 2026
Jul 17Nepal’s economy sees significant activity with NRB managing liquidity, a new fiscal budget of Rs 2.12 trillion going into effect, and a 3.06% rise …
nepalnews.com BusinessNepal’s banking stability faces its biggest test: Rising bad loans
Jul 17Nepal's banking sector faces a significant challenge as non-performing loans have more than tripled over five years, signaling rising financial stress despite overall economic …
nepalnews.com BusinessNepal Securities Board Unveils 10-Year Capital Market Development Roadmap
Jul 16Nepal Securities Board has unveiled a 10-year roadmap to transform and expand Nepal's capital market by 2036, aiming to double market size relative to …
ratopati.com BusinessBanks sit on Rs1.56 trillion in excess liquidity as weak credit demand persists
Jul 16Banks in Nepal are holding Rs1.56 trillion in excess liquidity due to weak credit demand and slow economic activity, despite robust deposit growth from …
kathmandupost.com BusinessNRB Unveils Major Policy Tweaks: Margin Lending Relaxed, Contractor Relief Extended, and National ID Rules Eased
Jul 15Nepal Rastra Bank has announced key regulatory changes including increased margin loan limits, contractor loan relief, extended working capital deadlines, higher LTV for electric …
sharesansar.com BusinessWhy Nepal’s banks are drowning in cash but starving for borrowers
Jul 13Nepal'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 …
nepalnews.com BusinessWhy Nepal’s banking boom is not fueling the economy
Jul 13Nepal's banking sector in 2026 shows record profits and liquidity surplus while facing a rising non-performing loan ratio and slow economic growth, revealing structural …
nepalnews.com BusinessNepal Rastra Bank Directs Banks to Reduce Dormant Accounts by Mid-2026
Jul 11Nepal Rastra Bank has instructed banks and financial institutions to reduce dormant accounts by mid-2026 and improve customer communication and account management processes.
ratopati.com BusinessMonetary Policy Update: Higher Loan Limits Offer Major Credit Relief for Housing, Shares, and Digital Lending
Jul 07Nepal Rastra Bank released its 25th monetary policy increasing loan limits for housing, shares, and microfinance to support economic growth and price stability in …
sharesansar.com BusinessNepal Rastra Bank Unveils Monetary Policy
Jul 07Nepal Rastra Bank has unveiled its monetary policy targeting inflation control at 5.5%, credit expansion of 11% to the private sector, and broad money …
ratopati.com Business