Private sector credit growth slows to 5.7% in nine months

KATHMANDU: Private sector credit disbursed by BFIs increased by 5.7%, or Rs 311.95 billion, over the first nine months of fiscal year 2025/26 to reach Rs 5,809.66 billion, according to the latest macroeconomic report released by the Nepal Rastra Bank on Monday.

According to the central bank’s Current Macroeconomic and Financial Situation Report, private sector credit had expanded by 7.1% in the same period of the previous fiscal year. On a year-on-year basis, however, private sector lending by BFIs grew by 6.9% in mid-April 2026.

Commercial banks recorded a 5.8% rise in private sector credit, while development banks and finance companies posted growth of 5.1% and 2.6%, respectively.

Sector-wise, lending to the consumable sector rose by 11.7%, followed by construction at 10.7% and transportation, communication and public services at 10.1%. Similarly, credit to industrial production increased by 6.5%, while lending to the service industry grew by 3.1%.

In contrast, lending to the agriculture sector declined by 2.3% during the review period.

Among lending categories, trust receipt loans linked to imports registered the highest growth at 32%, followed by margin loans at 13.4% and hire purchase loans at 8.5%. Real estate loans, including residential home loans, increased by 4.6%.

Despite slow private sector credit growth, deposits at banks and financial institutions (BFIs) grew by 8.5%, or Rs 615.67 billion, during the review period to reach Rs 7,879.54 billion. In the same period of the previous fiscal year, deposits had grown at a slower rate of 5.7%. On a year-on-year basis, however, BFI deposits expanded by 15.5% by mid-April 2026.

The composition of deposits also shifted significantly. The share of savings deposits rose to 45.3% from 35.8% a year earlier, while the share of fixed deposits declined to 38.9% from 51%. This is largely due to low interest yields on fixed deposit products.

Demand deposits accounted for 7% of total deposits, up from 5.7% a year ago.

The share of institutional deposits in total deposits declined slightly to 33.9% from 35.4% a year earlier.