Nepal’s commercial banks are facing mounting pressure from rising bad loans as borrowers struggle to repay debt and auctioned collateral remains unsold amid a prolonged economic slowdown.
According to Nepal Rastra Bank (NRB), the combined value of non-banking assets held by the country’s 20 commercial banks reached Rs 46.80 billion in fiscal year (FY) 2025/26, an increase of 18.89 percent from Rs 38.79 billion a year earlier.
Bankers say loan recovery has become increasingly difficult despite repeated follow-ups with borrowers and multiple attempts to auction pledged properties. Many borrowers continue to delay repayments, while weak demand in the real estate market has left banks unable to sell repossessed land and buildings. In some cases, bank officials involved in loan recovery have also faced security threats and physical assaults.
Among commercial banks, Himalayan Bank holds the largest volume of non-banking assets at Rs 6.24 billion, followed by Global IME Bank with Rs 5.89 billion and Nepal Investment Mega Bank with Rs 4.70 billion. Standard Chartered Bank Nepal was the only commercial bank reporting zero non-banking assets.
Banking experts warn that rising non-banking assets tie up capital in unproductive holdings, reduce profitability, weaken lending capacity and require additional loan-loss provisions. They argue that a sustained recovery in the economy, property market and construction sector is essential to accelerate collateral sales and improve banks’ balance sheets.
NRB has directed banks to dispose of non-banking assets as quickly as possible, but the slow pace of economic activity continues to hinder bad loan recovery.
