NRB Extends Reporting Deadline, Banks Shift Focus to Loan Recovery

In a recent move aimed at easing operational pressure on banks and financial institutions (BFIs), Nepal Rastra Bank (NRB) has extended the deadline for publishing their financial reports. As a result, most banks have shifted their immediate focus toward interest collection and loan recovery.

Previously, NRB required quarterly financial statements to be published within 7 days of the quarter-end, and the annual report within 21 days after the fiscal year-end. With the new directive, banks now have 15 days for quarterly reports and 30 days for annual statements. This additional time is expected to help banks recover outstanding loans and reflect improved financial performance in their reports.

Only Kamana Sewa Bikas Bank has published its unaudited report so far for the last fiscal year, showing a net profit increase of around 9%. Most other banks are delaying disclosure until they can improve collections and reduce loan losses — with the hope that stronger financials will reflect positively in the reports and market sentiment.

This decision by NRB comes at a time when the banking sector is still recovering from a difficult fiscal year. Although credit disbursement slightly increased, rising non-performing loans (NPLs) and poor provisioning severely hit the net income of many banks. Some even reported negative retained earnings, putting pressure on their capital base.

The extension is being seen as a strategic breather — especially for commercial banks with large unpaid interests. This grace period could allow them to collect more dues and enhance profitability metrics before publishing their books. Improved reports can help regain investor confidence, particularly as the stock market is seeing a modest recovery at the start of the new fiscal year.

On the regulatory front, the NRB’s monetary policy has introduced a few relief measures:

• Capital formation adjustments: Now, regulatory reserves formed after rights issues or capital increases can be counted under Tier 2 capital.

• Priority shares (preference shares): Banks have been allowed to issue these instruments, potentially providing an alternative channel for capital infusion.

These changes are meant to help banks stabilize their capital adequacy ratios and support long-term lending capacity.

With declining interest rates, banks’ traditional income sources are shrinking. Consequently, efficient loan recovery is critical for profit preservation. The recent surge in deposits further intensifies the need for sound lending and collection mechanisms to maintain margins.

Most commercial banks are expected to wait until mid-August to publish their reports — possibly leveraging the extension to show healthier balance sheets.

The NRB’s move provides temporary relief but reflects deeper concerns about the banking sector’s financial health. For investors, this signals that not all banks may be in stable condition — and report timing may indicate financial strength or distress. For banks, this is a short window to clean up balance sheets and rebuild market trust.

The coming weeks will be crucial. As interest collection figures solidify, we’ll have a clearer picture of which institutions have managed the crisis well — and which remain under pressure.