Outstanding Credit Reaches Rs. 5.57 Trillion as Industrial Loans Drive Nepal’s Banking Momentum

Nepal Rastra Bank’s latest data from the Sectorwise Outstanding Credit Report (Mid-August 2025) shows that the total outstanding credit of banks and financial institutions reached Rs. 5.57 trillion, reflecting Nepal’s ongoing industrial and infrastructural push despite an overall slowdown in agricultural and microfinance lending. The data highlights that while total credit dipped marginally by 0.3 percent compared to the previous month, the momentum in industrial and production-related loans remained strong. The production sector alone absorbed Rs. 890.8 billion, marking a 0.8 percent rise from the previous month, driven by key industries such as cement, iron and steel plants, textile manufacturing, and processed goods. These sectors have become major engines of credit growth, showing resilience amid moderate domestic demand and subdued export performance.

The construction sector also registered a steady expansion of 0.6 percent, mainly fueled by large-scale projects in highways, bridges, and urban infrastructure. This steady credit flow toward capital formation activities reflects improving business confidence and ongoing public-private infrastructure investments. Similarly, the transportation and energy sectors continued to attract strong lending activity—particularly in electricity generation and gas pipeline services, underscoring Nepal’s gradual shift toward industrial energy expansion and logistics modernization.

In contrast, agriculture credit contracted by 1.4 percent, dropping to Rs. 412.1 billion, with reductions in farming and livestock-related loans. This decline indicates subdued rural borrowing and reflects both decreased agricultural profitability and tighter credit oversight under NRB’s monetary control. The service sector, covering tourism, healthcare, and education, showed mixed results—rising in some areas such as hospitals and automotive services, while hotel and education loans slightly declined, suggesting uneven post-pandemic recovery in the tertiary economy.

The consumable loan category, which includes gold-backed loans, guarantee bonds, and personal financing, stood stable at Rs. 1.15 trillion, showing that household credit demand remains steady amid improving liquidity conditions. However, microfinance lending saw a notable drop of nearly 10 percent, primarily due to stricter NRB policies and subdued credit appetite in the low-income segment.