Credit Cards Still Low at 3.18 Lakh: Why Nepal Lags in Credit Penetration

As of Saun End, 2082 (Mid-August 2025), Nepal’s banking sector has issued only 3.18 lakh credit cards, a strikingly small figure compared to 1.36 crore debit card users and 2.79 crore mobile banking customers. Among these, commercial banks (Class “A”) account for the vast majority with 3.15 lakh cards, while development banks (Class “B”) contribute just 3,357 cards, and finance companies (Class “C”) have virtually no presence in this segment. This gap highlights Nepal’s lag in building a credit-driven consumer finance culture.

Several factors explain this underpenetration. First, credit cards require banks to extend unsecured credit, which carries higher risk in a country where Non-Performing Loans (NPLs) have already reached 4.62% overall. Institutions, particularly smaller ones, are reluctant to push such products, fearing repayment defaults and fraud risks. Second, Nepal’s banking system remains heavily deposit-focused, with savers more inclined toward fixed or savings accounts rather than borrowing-based instruments. Third, the informal economy plays a significant role—many consumers still rely on cash or personal lending channels, limiting demand for formal credit products like credit cards.

Cultural and behavioral factors also weigh heavily. Nepali households tend to prefer debt aversion and view credit cards with suspicion, associating them with overspending or financial traps. Moreover, many customers lack the financial literacy to manage revolving credit responsibly. High fees, limited merchant acceptance, and relatively underdeveloped e-commerce ecosystems further restrict credit card adoption.

This low penetration contrasts sharply with the rapid rise of mobile banking and QR-based payments, which provide convenience without the risks of debt. While mobile and digital wallets thrive in daily retail use, credit cards are still seen as niche products for urban elites, corporates, or frequent international travelers.

For the economy, the absence of a strong credit card culture means slower growth in consumer finance, lower household leverage, and limited development of retail credit markets. At the same time, it shields households from debt-driven instability. Going forward, broader adoption will depend on improving financial literacy, expanding merchant acceptance, reducing fees, and building trust in formal credit systems.