Nepal’s Broad Money Supply (M2) Expands by 12.4% to Rs 7.87 Trillion in Mid-September 2025 — NRB Monetary Survey

According to the Nepal Rastra Bank (NRB) Monetary Survey for Mid-September 2025, Nepal’s broad money supply (M2) reached Rs 7.87 trillion, showing a year-on-year growth of 12.4%. The rise was mainly driven by a sharp increase in foreign exchange reserves, strong private sector credit, and higher saving deposits, while government credit and time deposits declined slightly. The data indicate a stable but expansionary monetary environment backed by strong external liquidity and improving domestic demand.

Strong Growth in Foreign Assets

The survey shows that Net Foreign Assets (NFA) surged by 36.8% (Rs 774.65 billion) to reach Rs 2.88 trillion in mid-September 2025. This growth was underpinned by a 34.3% increase in total foreign exchange reserves, which climbed to Rs 3.04 trillion, reflecting robust remittance inflows, rising tourism earnings, and controlled import expenditure.
At the same time, foreign liabilities grew only marginally by 0.7%, indicating a stable external debt position. Deposits with foreign banks rose by 20.1%, signaling improved global liquidity access for Nepali financial institutions.

Domestic Assets and Credit Dynamics

Net Domestic Assets (NDA) increased by 1.9% to Rs 4.99 trillion, while total domestic credit rose by 5.5% to Rs 6.9 trillion. Within this, private sector credit expanded by 7.3%, reaching Rs 5.71 trillion, reflecting cautious optimism in lending and investment activities.
However, government credit contracted by 5.6% due to rising fiscal surpluses and a surge of 49% in government deposits. This shows an effort toward fiscal consolidation and reduced dependence on central bank financing.
Meanwhile, claims on non-financial government enterprises fell by 9.4%, while credit to other financial institutions grew by 8.9%, supporting interbank liquidity and financial stability.

Deposit and Liquidity Trends

In terms of monetary components, Money Supply (M1) increased by 18.2%, reaching Rs 1.06 trillion, driven by a rise in currency circulation (13.8%) and demand deposits (26%).
Saving and call deposits grew strongly by 36.9%, reflecting increased household and remittance-based savings. Conversely, time deposits fell by 4.9%, as individuals and businesses preferred short-term liquid holdings amid moderate interest rates and stable inflation.

Overall, Broad Money Liquidity (M3) expanded by 12.5% to Rs 7.96 trillion, highlighting healthy liquidity in the financial system without excessive inflationary pressure.

Monetary Efficiency and Policy Outlook

The money multiplier (M2) rose to 7.16, suggesting better efficiency in banking liquidity management. Reserve money also increased by 10.1%, consistent with NRB’s strategy to maintain sufficient liquidity to support credit expansion while keeping inflation under control.
The data confirm that Nepal’s monetary policy remains balanced — supporting growth through liquidity while preserving external stability through reserve accumulation.