Wholesale and Retail Credit Sees Rs. 4.8 Billion Decline Amid Sluggish Trade Demand

According to the Nepal Rastra Bank’s Sectorwise Credit Report for Mid-August 2025, the wholesale and retail trade sector experienced a decline of Rs. 4.8 billion (−0.5%) in outstanding bank credit compared to the previous month. The total credit to the sector fell to Rs. 1.028 trillion from Rs. 1.033 trillion in mid-July 2025. The contraction indicates weakening trade activities and subdued consumer demand across both durable and non-durable goods segments.

The detailed breakdown shows that wholesale credit for durable goods such as vehicles, electronics, and machinery declined by Rs. 1.48 billion (−0.8%), reflecting slower imports and restrained business sentiment. Similarly, non-durable wholesale credit, including daily essentials, food items, and fast-moving consumer goods (FMCG), remained nearly stagnant with a slight rise of just 0.1%, suggesting sluggish restocking among retailers.

Interestingly, automotive dealers and franchise-based businesses saw modest growth of 3.9%, reaching Rs. 105.8 billion — driven by new vehicle models and festival season demand. However, other retail businesses, which form the largest portion of the category, dropped by Rs. 7.8 billion (−1.7%), signaling lower consumer spending and cautious inventory management among small traders.

The import and export trade segments remained mixed: import-related credit rose marginally by 0.2%, while export-related loans dropped by 1.5%, reflecting Nepal’s ongoing trade imbalance and limited export competitiveness. Analysts suggest that the slowdown in trade-related credit is partly due to tighter liquidity conditions, higher interest rates, and weak domestic purchasing power — factors that collectively dampened trading activity during the review period.