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By Sandeep Chaudhary

Private Sector Credit Expands 7.4% Year-on-Year to Rs 5.7 Trillion – Lending Momentum Continues in FY 2025/26

Private Sector Credit Expands 7.4% Year-on-Year to Rs 5.7 Trillion – Lending Momentum Continues in FY 2025/26

According to the latest Nepal Rastra Bank (NRB) Mid-September 2025 “Other Depository Corporation Survey (y-o-y)”, credit to the private sector expanded by 7.4% year-on-year, reaching Rs 5.70 trillion, compared to Rs 5.31 trillion in the same period of the previous fiscal year. This growth of Rs 392 billion indicates a gradual yet sustained recovery in lending momentum across Nepal’s banking system during FY 2025/26.

The increase in private sector credit was primarily driven by loans to non-financial private corporations, which rose by 5.7% to Rs 3.48 trillion, reflecting improving business sentiment and rising demand for working capital. Meanwhile, household credit surged by 11.5%, reaching Rs 2.06 trillion, supported by personal loans, home construction financing, and SME lending. This reflects a rebound in consumer confidence and the expansion of credit access facilitated by digital banking channels and improved liquidity management in commercial banks.

However, the pace of credit expansion remains moderate compared to earlier years, as the NRB continues to prioritize monetary stability, prudent lending standards, and inflation control. The central bank’s focus on channeling credit toward productive sectors such as agriculture, manufacturing, and tourism has contributed to balanced credit distribution while discouraging speculative or high-risk lending.

At the same time, interest-accrued loans declined by 4.4%, signaling improved repayment discipline and better loan performance in the system. The overall credit-to-deposit ratio remains healthy, indicating that liquidity is being effectively transformed into productive credit.

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