Micro Cottage Small & Medium Enterprise (MCSME) Lending Trends

Micro, Cottage, Small & Medium Enterprises (MCSME) are the backbone of Nepal’s economy, and NRB requires commercial banks to allocate at least 11% of their lending portfolio to this sector. The latest data (Mid-July 2025) highlights that some banks have strongly embraced this mandate, while others continue to lag behind. Among the leaders, Agriculture Development Bank (24.64%), Nepal Bank Limited (17.59%), and NIC Asia Bank (16.74%) stand out for surpassing the requirement by a wide margin. This reflects their proactive strategy in supporting small-scale industries, entrepreneurs, and rural businesses, which are crucial for job creation and inclusive growth. Similarly, banks like Kumari (13.15%) and Machhapuchhre (11.14%) are also meeting the benchmark, demonstrating their commitment to grassroots-level financing.

On the other hand, many large banks fall short of NRB’s target. Standard Chartered (4.55%), Himalayan (4.51%), and Nepal SBI (6.91%) are significantly underperforming, indicating their stronger tilt towards corporate and wholesale lending rather than riskier SME financing. Even established private banks like Everest (9.36%), Prabhu (9.27%), and Prime (8.55%) remain below the mandated threshold. This creates a visible divide between banks with development-driven mandates (state-owned and select aggressive private banks) and those more cautious in SME exposure.

The overall picture suggests that while state-owned institutions like ADBL and Nepal Bank continue to champion SME financing, and aggressive private players like NIC Asia are stepping up, several large private and foreign banks still need to recalibrate their portfolios. For investors and policymakers, these trends highlight both compliance gaps and growth opportunities in Nepal’s SME sector.