- Wednesday, 25 February 2026
NRB to expand lending to tourism, IT
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Kathmandu, Feb. 25: The Nepal Rastra Bank (NRB) said on Tuesday that the priority sector lending facility will be expanded to tourism, information technology and export-oriented industries based on domestic
raw materials.
The NRB had first implemented the directed lending in 1974 for small sector lending which was later expanded to agriculture and energy as well.
Through the mid-term review of the Monetary Policy for the current Fiscal Year 2025/26, the central bank has announced the expansion of the scope of the sectoral lending limit to new and emerging sectors. According to the NRB, foreign investment in infrastructure development, including data centres, cloud computing, robotics laboratories and artificial intelligence, will also be facilitated. Co-financing by banks and financial institutions in such projects will be encouraged.
Furthermore, the existing provision requiring banks and financial institutions (BFIs) to maintain minimum lending ratios in each such sector will be revised.
Responding to the demand of the private sector, the NRB said that it would amend the working capital lending guidelines to allow the BFIs to determine the tenure of working capital loans based on analysis of the borrower’s cash flow and financial statements.
“In addition, the existing provision requiring borrowers to reduce their outstanding working capital loan balance to below 10 per cent for at least seven consecutive days in a year will be revised, increasing the threshold to below 30 per cent,” read the review.
Blacklisting provisions to be reviewed
The NRB has also expressed its intention to revise the provisions for blacklisting.
It said that borrowers unable to repay loans immediately due to situational circumstances will not be included in the blacklist, and blacklisted borrowers may be temporarily removed from the blacklist for up to six months by the BFIs if valid reasons for repayment are presented. This removal, however, will be implemented to facilitate recovery.
The central bank has also revised the cash transaction limit. New provisions require payments of Rs. 500,000 or above to be made compulsorily through account-payee cheque or via the concerned person’s bank account.
Likewise, the BFIs will be allowed to restructure and reschedule loans disbursed to enterprises/businesses displaced due to the expansion of the Mahendra Highway and the Mid-Hill Highway, by charging a minimum interest rate of 10 per cent, until mid-July 2027.
However, the existing provisions relating to the interest rate corridor, bank rate, cash reserve ratio (CRR), and statutory liquidity ratio (SLR) have been kept unchanged.
The revised Monetary Policy has announced to reduce the bank rate to 6 per cent from 6.5 per cent, deposit collection rate (lower limit of the interest rate corridor) to 2.75 per cent from 3 per cent, policy rate from 5 per cent to 4.5 per cent. But the first-quarterly review of the policy has further reduced bank rate to 5.75 per cent and policy rate to 4.25 per cent.
It didn’t change the provisions for Standing Liquidity Facility (SLF) and existing arrangements regarding Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) provisions for the BFIs were continued.
“This bank has adopted a policy of gradually narrowing the gap between the upper and lower bounds of the interest rate corridor and maintaining the policy rate at the midpoint of the corridor,” said the NRB.
Private sector credit remains low
According to the central bank, targets set for broad money supply and private sector credit were not met in the first half of the current year. Money supply stood at 5.4 per cent against the target of 13 per cent while the private sector lending could achieve only 3.8 per cent success against the target of 12 per cent.
Meanwhile, target of maintaining foreign exchange reserves sufficient to cover at least seven months of imports of goods and services has been exceeded, with reserves as of mid-January 2026 sufficient to cover 18 months of imports.
The limit on personal overdraft loans provided by banks and financial institutions has been increased to Rs. 10 million this year. Earlier, the limit was Rs. 5 million.
Likewise, the lending limit against collateral by microfinance financial institutions has been increased to Rs. 1.5 million from existing Rs. 700,000. Such institutions have also been allowed to revise repayment schedules based on the borrower’s needs and justification.
In fiscal year 2025/26, average annual inflation rate remained at 1.70 per cent during the first six months against the 5 per cent target set by the policy.
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