Nepali Banks’ Capital Buffer vs South Asian Peers

Nepali banks have consistently maintained strong capital adequacy compared to many of their South Asian peers, primarily due to Nepal Rastra Bank’s (NRB) strict regulatory framework. As of mid-July 2025 (Asadh 2082), the average Capital Adequacy Ratio (CAR) of Nepali commercial banks stood at 12.78%, well above the regulatory minimum of 11%. State-owned banks such as Agriculture Development Bank (13.36%) and Nepal Bank (13.06%) showcase relatively higher buffers, while Rastriya Banijya Bank (11.84%) stays closer to the regulatory threshold. Among private banks, Standard Chartered Nepal (17.82%) has one of the region’s strongest capital cushions, highlighting its conservative approach to risk management.

When compared regionally, Nepali banks are in a relatively stronger position. For instance, India’s banking system, after years of NPL stress, reports CAR averages around 15–16% for top private banks but significantly lower for weaker public banks. In Bangladesh, many state-owned banks struggle to maintain even the minimum CAR, with some dipping below 10%. Similarly, Sri Lankan banks, hit by the economic crisis, are operating with thin buffers, averaging 11–12%, close to Nepal’s threshold. Pakistan’s banking sector also faces pressure, with CAR averaging around 15%, but profitability is hampered by high government securities exposure and political instability.

Nepali banks, therefore, stand out for maintaining stability despite recent economic pressures, liquidity stress, and rising Non-Performing Loans (NPLs). The enforced regulatory buffer has ensured that even aggressive lenders like NIC Asia and Global IME remain above the 12% mark. However, given Nepal’s slowing credit growth, rising NPLs, and external economic uncertainties, the capital cushion must be seen not just as a compliance measure but as a shield against systemic shocks.