Nepali commercial banks increased their lending by a nominal ratio in the first seven months of the current fiscal year. However, they continue to face challenges in managing an overwhelming surplus of loanable funds.
According to Nepal Rastra Bank (NRB), commercial banks increased their lending by 5.62 percent, surpassing the 4.21 percent growth in deposit collection between mid-July 2024 and mid-February 2025. During this period, deposit collection surged to Rs 5.997 trillion from Rs 5.754 trillion, while lending rose to Rs 4.827 trillion from Rs 4.570 trillion. The loan amount increased by Rs 256 billion, compared to a Rs 242 billion rise in deposits.
Out of 20 commercial banks, seven achieved significant lending growth. Everest Bank led with an 18.40 percent (Rs 34 billion) increase, reaching Rs 220 billion. Global IME Bank recorded a 10.38 percent (Rs 40 billion) rise, while Machhapuchchhre Bank saw a 9.59 percent (Rs 12 billion) increase. Laxmi Sunrise Bank, Citizens Bank, Siddhartha Bank, and Himalayan Bank also posted notable growth in their loan portfolios.
The marginal increase in lending pushed the average credit-deposit (CD) ratio to 79.35 percent, still below NRB’s 90 percent ceiling. Among individual banks, Himalayan Bank recorded the lowest CD ratio at 63 percent, while Prime Commercial Bank had the highest at 85.77 percent.
Nepali banks are grappling with multiple challenges, including liquidity surpluses, rising loan defaults, increasing non-banking assets, and stagnated lending. Non-banking assets reached Rs 40.75 billion, an increase of Rs 17.04 billion over the past year.
In response to liquidity issues, banks have lowered their weighted lending interest rate to 8.69 percent—a decline of 2.69 percentage points from a year ago. The base interest rate has also dropped to as low as 6.65 percent, with banks charging only an additional 1.5 percent premium due to weak loan demand, compared to the previous five percent.
Amid continued struggles to improve lending, the NRB absorbed Rs 40 billion from the banking system on Sunday. In the first six months of the current fiscal year, the central bank mopped up a total of Rs 14.1 trillion in excess liquidity.
