Credit Growth Nepal: Sector-wise Breakdown (8M 2025/26)
Nepal's banking sector credit allocation reveals which sectors are driving economic growth and where credit demand is weakening. Based on NRB data for FY 2025/26, here is the sector-wise credit breakdown.
Major Sector Credit (Outstanding, Mid-March 2026)
| Sector | Jul 2025 (Rs. M) | Mar 2026 (Rs. M) | % Change |
|---|---|---|---|
| Agriculture | 417,889 | 409,593 | -1.99% |
| Production/Manufacturing | 884,047 | 933,479 | +5.59% |
| Food Production | 176,190 | 187,666 | +6.51% |
| Ag & Forest Production | 39,147 | 41,551 | +6.14% |
| Mines | 11,755 | 13,134 | +11.73% |
Key Credit Trends
1. Manufacturing Leads Credit Growth: The production/manufacturing sector received the most credit — Rs. 933,479M — with 5.59% growth from July. Within this, food production (+6.51%) and agriculture-based manufacturing (+6.14%) are key growth areas.
2. Agriculture Credit Declining: Agricultural credit fell -1.99% from Jul 2025 (Rs. 417,889M → Rs. 409,593M). This is concerning given Nepal's agrarian economy. Farming services credit declined -6.11% and tea sector fell -8.32%.
3. Emerging Growth Areas: Mining credit grew +11.73%, though from a small base. Oil and gas extraction credit surged +51.63% (Rs. 1,705M → Rs. 1,705M from Jul Rs. 1,321M). These are small but growing sectors.
Credit and Interest Rate Relationship
Credit growth has been moderate despite relatively low interest rates in the first half. As the NRB raised rates in January 2026 (repo to 5.0%, lending rates to 8.40%+), credit demand may slow further in coming months. The tightening aims to curb inflation but risks dampening credit-dependent sectors like manufacturing and construction.
Conclusion
Nepal's sector-wise credit data shows manufacturing as the primary credit absorber with healthy growth. Agriculture credit decline is a policy concern. The rising interest rate environment from January 2026 could moderate overall credit growth going forward, requiring the NRB to balance inflation control with growth support.