Nepal Rastra Bank (NRB) has taken a more flexible approach to expanding credit flow into the primary sectors—particularly agriculture, micro, small, and medium enterprises—by extending the timeline for banks and financial institutions (BFIs) to meet mandatory sectoral lending targets.
As per the amended Unified Directives for Banks and Financial Institutions 2024, the central bank has granted commercial banks an additional year, pushing the deadline to mid-June 2028 to allocate a minimum of 15 percent of their total lending portfolio to the agriculture sector and SMEs. The original deadline was set for mid-June 2027.
Under the revised schedule, commercial banks must meet a phased target:
- 11% lending to the primary sectors by mid-June 2025,
- 12% by FY 2025/26,
- 13% by FY 2026/27, and
- 15% by FY 2027/28.
Similarly, development banks and finance companies—classified as ‘B’ and ‘C’ category institutions—have also been given a one-year extension. Development banks must now channel 20% of their total credit to specified priority sectors including agriculture, household, micro, small enterprises, energy, and tourism, while finance companies are required to meet a 15% threshold by FY 2027/28.
To encourage more targeted lending, the NRB has allowed banks that have already met the agriculture lending requirement to redirect additional funds toward other specified sectors within their areas of expertise. These funds will still be counted under the primary sector lending quota.
In a further supportive measure, the NRB has also allowed BFIs to reschedule or restructure loans up to Rs 20 million in agriculture, energy, and micro/household/SME sectors that are facing financial distress. However, this relief is conditional:
- At least 10% of the accrued interest must be recovered from borrowers during rescheduling.
- The restructuring must be completed by mid-October 2025.
- The restructured loans must retain their original classification as of mid-January 2024.
- BFIs are barred from writing back loan loss provisions before the restructuring is implemented.
This move reflects NRB’s broader strategy to stimulate inclusive economic growth, support productive sectors, and improve access to finance for businesses that often face funding bottlenecks—especially in rural and under-served areas.
