Banks in Nepal have significantly expanded their investments in real estate loans. In the past fiscal year, commercial banks collectively released loans over Rs 217 billion in real estate, as per the latest data from the Nepal Rastra Bank (NRB).
This represents a notable increase compared to the previous year when banks had invested a total of Rs 199 billion in real estate loans. In just one year, commercial banks saw their investments in home loans grow by Rs 18.32 billion, marking a 9.17 percent increase.
The regulatory authority, NRB, had imposed tighter regulations on investments in the real estate sector to prevent excessive speculation. However, despite these regulatory measures, it appears that banks have increased their investments in the real estate sector. The NRB has been vigilant in curbing excessive credit expansion in non-productive sectors.
In the previous year, it was suggested that banks could not invest in real estate due to liquidity constraints. The real estate market had also been impacted by a lack of liquidity in stock exchanges, banks, and financial institutions, as well as rising interest rates. Nevertheless, NRB data indicates that banks have expanded their investments in real estate despite financial challenges and liquidity shortages.
NIMB, NABIL, and NIC Asia lead real estate investments
KATHMANDU, Sept 2: Nepal Investment Mega (NIMB) Bank stands out as the largest investor in real estate, with investments exceeding Rs 25 billion in the past year. This marks a remarkable 35.56 percent increase in real estate loan investments compared to the previous year.
Nabil Bank, securing the second position, has also increased its investments in this sector by 27 percent. Last year, Nabil invested more than Rs 23 billion in this sector. NIC Asia, in the third position, has increased its investment by 13.18 percent compared to the previous year, amounting to Rs 21 billion in real estate loans.
Other notable banks during this period include National Commercial Bank (Rs 17 billion), Global IME (Rs 15 billion), Prime Bank (NPR 15 billion), and Himalayan Bank (NPR 15 billion) in real estate loans.
Similarly, Prabhu Bank invested Rs 14.24 billion, Nepal Bank Rs 11.86 billion, and Laxmi Sunrise Bank Rs 10.72 billion in real estate loans last year.
Everest Bank leads in loan expansion: Machhapuchhre Bank lags behind
Everest Bank leads the expansion of real estate loan investments, significantly surpassing the previous year’s figures. The bank increased its investments in real estate loans by 57.44 percent, reaching Rs 6.66 billion last year.
Most banks have shown an increase in their investments. However, Machhapuchhre Bank experienced a decrease, with a 68.42 percent reduction in real estate loan investments compared to the previous year. In the previous year, Machhapuchhre Bank had invested over Rs 6.6 billion in real estate loans.
Additionally, Standard Chartered Bank invested Rs 7.78 billion in real estate loans, Sanima Bank Rs 6.56 billion, Siddhartha Bank Rs 5.91 billion, and Nepal SBI Rs 4.97 billion.
Citizen Bank invested Rs 4.53 billion, Kumari Bank Rs 1.86 billion, and Agricultural Development Bank Rs 1.65 billion in real estate loans. However, these banks’ investments in real estate loans decreased compared to the previous year.
