NRB Removes Single Obligor Limit — Major Policy Shift for Bank Lending in Nepal

Nepal Rastra Bank (NRB) has made a major regulatory shift by removing the long-standing Single Obligor Limit (SOL)provision from its Unified Directives 2081 (2024 AD).

Previously, this provision restricted any licensed bank or financial institution from extending loans or credit exposure exceeding NPR 25 crore to a single borrower or group of related parties. The intent was to prevent concentration risk and safeguard the stability of the banking sector by ensuring that excessive lending was not directed toward a single entity.

Under the earlier rule, any lending or guarantee exceeding this NPR 25 crore ceiling required prior approval from NRB. If an institution violated this limit without approval, both the board of directors and management could face regulatory penalties and corrective actions under NRB’s supervision.

However, through the recent circular issued in Ashoj 2082 (October 2025), NRB has removed this restrictive clause entirely, signaling a new liberalized approach to credit exposure management. This removal grants banks greater flexibility to structure large-scale financing for major infrastructure, industrial, and hydropower projects without undergoing lengthy approval processes.

While this move enhances lending autonomy, it also places greater responsibility on banks’ internal risk management systems and corporate governance to ensure prudent lending practices. Analysts believe the reform aims to support the government’s broader economic agenda of accelerating investment and credit flow amid Nepal’s ongoing liquidity surplus.