Nepal Banking Sector Challenges 2026

The Ministry of Finance unveiled a 21-point Capital Market Strengthening and Revival Action Plan to restore investor confidence and make Nepal’s capital market more competitive and transparent. The package includes IPO reforms, NEPSE restructuring, new bond-market rules, broader institutional participation, and legal changes for margin lending, intraday trading and short selling.

Stakeholders at Nepal Capital Market Discourse 2026 called for structural reforms, new financial products, stronger surveillance and more investor education. SEBON said it is preparing an AI-based supervision system and new rules to diversify the market beyond ordinary share trading.

SEBON proposed draft Bond Registration and Issuance Regulations, 2083, requiring at least Rs 1 billion in capital for bond issuers. The draft also broadens access beyond banks and financial institutions while adding secured-bond, rating, trustee and collateral requirements.

SEBON released draft Debenture Registration and Issue Regulations, 2083 B.S. for public consultation. The proposal would allow eligible corporate companies to raise long-term funds through bonds and debentures as part of Nepal’s broader capital market reform agenda.

The government said it is preparing regulations to legalize peer-to-peer lending through Nepal Rastra Bank within the current fiscal year. The framework is slated for inclusion in the upcoming Payment and Settlement Bill.

SEBON said it is preparing new market products, clearer trading rules, and stronger regulatory guidelines to modernize Nepal’s capital market. Brokers are also pressing for securities law changes and an Auto-EDIS system for smoother settlement.

Parliamentary Finance Committee members were scheduled to discuss a bill to amend the Nepal Rastra Bank Act, 2058, with the finance minister and finance secretary invited. The meeting was part of a broader round of committee hearings on legislation and governance.

The Prime Minister’s Office directed ministries and agencies to implement Nepal’s FATF action plan on fixed deadlines and under regular monitoring. Officials said the country aims to complete the required reforms by mid-February 2027 to exit the grey list.

SEBON Chair Dr. Gopal Prasad Bhatta met the IMF’s Nepal resident representative in Lalitpur to discuss capital market reforms, transparency, and institutional strengthening. The IMF said it would continue supporting Nepal’s financial sector and related policy coordination.

SEBON drafted a new margin lending regulation that would allow eligible investors to borrow against their equity and introduce intraday trading, securities lending and borrowing, and covered short-selling. The proposal is now open for public consultation.

Nepal Rastra Bank said it would raise Rs 20 billion through a 35-day deposit collection instrument, again using online bidding. The auction will allocate funds to the lowest-rate bids, with pro-rata allocation if needed.

SEBON unveiled the Primary Capital Market Reform Policy 2083 to modernize Nepal’s primary capital market through legal reforms, digital issuance, market-based pricing, and stronger investor protection. The policy aims to expand long-term financing for industries, SMEs, infrastructure, and green projects.

Nepal Rastra Bank announced a Rs 30 billion deposit collection from banks and financial institutions through bidding, with repayment due in September 2026. The central bank said the 35-day instrument would be allocated to the lowest interest-rate bids.

Nepal Rastra Bank said it would collect Rs 60 billion through a 31-day deposit auction to manage banking-system liquidity. Eligible Class A, B and C banks and financial institutions were told to bid through the online system.

SEBON released a white paper for the long-term development of Nepal’s primary capital market, outlining legal amendments, institutional upgrades and a three-phase reform plan over five years. It proposes a Digital IPO Platform, e-KYC, RegTech, SupTech and market-based price discovery.

Nepal Rastra Bank announced it would collect NPR 85 billion in three-month deposits from banks and financial institutions through online bidding. The move was aimed at absorbing excess liquidity and managing monetary conditions.

SEBON formed a seven-member Primary Market Reform Facilitating Task Force under its FY 2083/84 agenda. The group will review IPO allocation, book-building, digital IPO systems and investor participation.

Nepal’s finance minister said the market will be restructured with phased introduction of intraday trading, short selling and derivatives. The comments came as investors pressed SEBON for reforms to make NEPSE less one-way.

Nepal Rastra Bank decided to collect Rs 25 billion through a 61-day deposit instrument to manage excess liquidity in the banking system. Banks and financial institutions were invited to bid through the online system, with rates set by auction.

Global IME Bank launched an app-based service that lets Nepali citizens open savings accounts online through the Citizen App using their National Identity Card. The service reduces paperwork and retrieves customer information with user consent.

Nepal Rastra Bank amended its Integrated Payment System Directive to require payment service providers to verify digital wallets with the National Identity Card system and have users update wallet details by the end of Ashwin 2083. The change formalizes ID-based compliance for wallet openings and updates.

Five 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.

Nepal Rastra Bank relaxed the mandatory National ID requirement for bank accounts, extended the compliance deadline to Ashwin 2083, and said accounts will no longer be automatically frozen for missing ID details. Banks must instead send periodic reminders, and non-resident Nepalis can open accounts online without an ID until they update it after returning.

Nepal 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%.

Nepal'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.

Nepal 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.

Nepal’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%.

Nepal 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.

Nepal’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.

Nepal’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%.

Nepal Rastra Bank directed banks to reduce dormant accounts by mid-2026, requiring amended regulations and regular customer notifications via phone, SMS, or email.

Nepal 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.

Nepal 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.