KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The recent 4.17% surge in the Nepal Stock Exchange (NEPSE) index reflects growing investor optimism ahead of the new fiscal year, driven by increased trading volumes, higher turnover, and a positive market sentiment fueled by expectations of long-delayed dividends.
This bullish trend is further supported by broad gains across sector indices, particularly in life insurance and finance, indicating strengthening confidence in key industries. However, this optimistic outlook contrasts with underlying financial challenges, such as the accumulation of over Rs 869 billion in idle funds within banks, suggesting inefficiencies in credit distribution despite rising deposits.
The overall market momentum underscores the interplay between investor sentiment, regulatory reforms, and macroeconomic factors shaping Nepal’s financial landscape, while signaling opportunities and risks as the country pursues broader economic modernization and integration with global trade practices.
NEPSE surges 4.17% as investor optimism grows ahead of new fiscal year
The Nepal Stock Exchange (NEPSE) index climbed 4.17% this week, closing at 2,703.96 points. The market stayed positive throughout the five trading days, with turnover reaching Rs 39.93 billion—up nearly 14%. Trading volume rose 17.8% to 101.7 million shares. Brokers report increased margin lending as investor confidence strengthens ahead of the new fiscal year starting July 17. Anticipation of long-pending dividends is fueling optimism. Market capitalization rose to Rs 4,505.19 billion. The Sensitive Index increased 4.63%, with all sector indices gaining. Life insurance led with an 8.5% rise, followed by finance, development banks, and non-life insurance.
IMF calls for central bank independence in Nepal’s draft law revision
The IMF has advised Nepal to remove government interference from the Nepal Rastra Bank’s draft law to ensure full autonomy. Currently, the draft allows the finance secretary to be an ex-officio member and government appointments of three board members. The IMF, citing global best practices, recommends eliminating these provisions. While recognizing Nepal’s unique economic context, the IMF stressed completing reforms, including the NRB Act amendment and bank audits, to secure future loan disbursements. Domestic consensus on central bank independence is still pending.
Soybean and sunflower oil trade through Birgunj surges to over Rs 119 billion in 11 months
Imports of crude soybean oil through Birgunj customs soared by 613.41% to Rs 52.58 billion in the first 11 months of the fiscal year, up from Rs 7.37 billion last year, according to Birgunj Customs Chief Deepak Lamichhane. Exports of refined soybean oil also rose dramatically to 2.58 million liters worth Rs 55.3 billion, compared to 464,138 liters worth Rs 88.3 million last year. Crude sunflower oil imports reached Rs 9.75 billion, while refined sunflower oil exports hit 38.9 million liters valued at Rs 8.4 billion, reflecting Nepal’s expanding re-export market.
Nepal urges Malaysian investors to expand cooperation in infrastructure, tourism, and trade
Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel invited Malaysian investors to invest in Nepal’s infrastructure and tourism sectors, emphasizing the country’s investor-friendly environment. Speaking to a Malaysian business delegation led by Pradeep Kumar Kukreja, Paudel promised full government support. The delegation showed interest in IT, hydropower, trade, and environmental sectors. Separate talks with FNCCI and NCC explored opportunities for trade growth, investment, and ASEAN linkages, with a focus on job creation and reducing Nepal’s trade deficit with Malaysia.
Insurance sector needs Rs 30 billion in Asar to meet GDP contribution goals
To achieve a projected 3.69% insurance premium contribution to GDP this fiscal year, Nepal’s insurance industry must collect Rs 30.27 billion in the month of Asar. By the end of Jestha, 93% of the Rs 225.31 billion target was met. Life insurers need Rs 24.21 billion and non-life Rs 6.05 billion in Asar premiums. Asar is typically the peak month for premium collection due to end-of-year targets and incentives. The Nepal Insurance Authority expects this year’s premium-to-GDP ratio to be the highest in five years.
Over Rs 869 billion in idle investable funds accumulate in Nepali banks
Nepal’s banks and financial institutions currently hold around Rs 869 billion in idle funds, raising concerns over liquidity management. Despite a notable rise in deposits, credit lending has not kept pace, causing a growing gap between available funds and actual loans. Experts warn this imbalance may destabilize the financial system, as banks find it difficult to allocate excess liquidity productively. This situation reflects deeper issues in credit demand, investor confidence, and policy coordination, highlighting the urgent need for reforms to improve capital utilization.
Micro-insurance companies collect nearly Rs 2 billion in premiums over 11 months
Nepal’s micro-insurance sector has grown steadily, with seven companies collecting Rs 1.94 billion in premiums during the first 11 months (Shrawan to Jestha). Three life micro-insurers issued 1.66 million active policies worth Rs 1.09 billion; Guardian Micro Life led with Rs 413.7 million from 1.12 million policies. Four non-life micro-insurers issued 339,000 policies, collecting Rs 849.6 million, with Nepal Micro Insurance leading at Rs 237.9 million. This growth reflects increased coverage among underserved communities.
Supreme court clears way for bank audits, boosting IMF loan prospects
The Supreme Court lifted its temporary order halting the Loan Portfolio Review of ten major banks, enabling Nepal Rastra Bank to continue audits. This development improves Nepal’s chances of receiving the IMF’s sixth loan installment of $42.7 million. The audit, carried out by Bangladesh-based Howladar Yunus & Co., will assess loan quality and address concerns about loan restructuring. NRB will deploy 22 auditors, and final IMF approval depends on completing remaining reforms.
Insurance companies heavily favor bank deposits, avoid real estate investments
Nepali insurance companies have predominantly invested in fixed bank deposits, steering clear of real estate despite regulations permitting up to 10% allocation in property. According to Nepal Insurance Authority data, life insurers placed 70.10% and non-life insurers 67.14% of funds in bank term deposits. By Q3 of the current fiscal year, life insurers had invested Rs 733.74 billion overall, with Rs 514.42 billion in deposits. Analysts attribute this trend to a preference for low-risk assets, while real estate remains untouched.
Nepal removes bank guarantee requirement for EXIM code, easing trade for businesses
Nepal’s Department of Customs has eliminated the mandatory NPR 3 lakh bank guarantee needed to obtain an Export-Import (EXIM) Code, following the 16th amendment to the Customs Regulation 2064. This change, effective immediately, simplifies trade registration and improves access for small and medium enterprises (SMEs). Commercial banks have been instructed to release previously held guarantees, freeing working capital, reducing paperwork, and speeding up the EXIM Code process. Experts say this aligns Nepal with global trade facilitation standards and could boost export diversity and competitiveness, marking a key step in modernizing the country’s trade environment.
Hydropower projects in Lamjung reach full capacity as monsoon boosts rivers
Hydropower plants in Lamjung district are now operating at full capacity following consistent monsoon rains that raised river flows. Major rivers like Marsyangdi, Dordi, Ngadi, and Khudi have surged, enabling electricity generation to recover from winter lows. The 70-MW Middle Marsyangdi and 50-MW Upper Marsyangdi-A projects have resumed full output. Other plants, including Super Dordi ‘B’, Ngadi, and Upper Dordi ‘A’, also operate at full scale, with smaller stations scaling up, bringing total district production to around 300 MW.
Malaysian business delegation meets PM Oli to discuss investment in Nepal
A 20-member Malaysian delegation from the Malaysia-Nepal Business Council, led by Dato Pradeep Kumar Kukreja of Paradise Group, met former Prime Minister KP Sharma Oli to explore investment opportunities. The meeting at Baluwatar focused on launching projects and understanding Nepal’s business climate. PM Oli assured government commitment to reforms supporting foreign investment and private sector cooperation. The delegation expressed interest in plastic waste management, IT parks, and tourism. The visit was coordinated with Nepal’s embassy in Malaysia.
Indigenous commission recommends shifting Kathmandu-Terai expressway starting point amid protests
The Indigenous Nationalities Commission, led by Ram Bahadur Thapa Magar, has proposed relocating the starting point of the Kathmandu-Terai Expressway. Construction of the 71 km expressway by the Nepali Army has faced delays in Khokana due to protests by the local Newar community, concerned about impacts on cultural and religious heritage, especially the sacred Sikali Temple. The commission suggests moving the entry point 6–7 km south to Dukuchhap in Godawari Municipality, Ward-8, with new access roads and tunnels linking important sites. Although the proposal was submitted to PM KP Oli on Asar 4, no formal government discussion has followed.
BYD Nepal import dispute sparks controversy as dealer appeals to Chinese Embassy
A dispute arose after BYD’s official Nepal distributor, Cimex Inc., reportedly sought intervention from the Chinese Embassy regarding import delays of the new electric vehicle Sealion 7. The Department of Transport Management requested additional documents on motor power and embedded SIMs before approving imports. While still within the legal 15-day review period, Cimex MD Yamuna Shrestha, also head of NADA’s Revenue Committee, appealed to the embassy, citing unnecessary restrictions. Industry experts criticized this diplomatic move, warning it risks undermining regulatory processes and setting a dangerous precedent for automobile import governance.
Parliamentary panel calls for transparency on loan distribution among business groups
Nepal’s Public Accounts Committee has urged clear disclosure of loan allocations among business groups. During discussions on amending the Banking and Financial Institutions Act (BAFIA), lawmakers stressed distinguishing bankers from business borrowers and publishing loan details publicly. NRB Governor Dr. Bishwanath Poudel revealed that a small number of borrowers hold a disproportionately large share of loans, raising concerns about credit concentration. Independent lawmaker Dr. Amaresh Kumar Singh recommended limiting CEO tenures, enhancing transparency, and incentivizing loans in agriculture, energy, and tourism sectors.
Businessman Niraj Govinda Shrestha enters aviation sector
Non-resident Nepali businessman Niraj Govinda Shrestha has launched Sumedha Air, a helicopter company authorized to operate three H125 helicopters. The Ministry of Culture, Tourism, and Civil Aviation granted a domestic air service license valid until July 1, 2029. Based at Nalinchowk Helipad in Bhaktapur, Sumedha Air is preparing to apply for an Air Operator Certificate (AOC) from the Civil Aviation Authority of Nepal. Shrestha, previously an investor in Ncell, banking, and hydropower, marks his return to Nepal’s business landscape through this significant aviation venture.
Kathmandu misses budget deadline for first time; other major cities announce Rs 28.62 billion combined budget
For the first time since federalism began, Kathmandu Metropolitan City (KMC) failed to present its FY 2025/26 budget by the legal deadline of Asar 10, due to internal conflicts among Mayor Balen Shah, Deputy Mayor Sunita Dangol, and the Chief Administrative Officer. In contrast, Lalitpur, Pokhara, Birgunj, Biratnagar, and Bharatpur all met the deadline, unveiling combined budgets totaling Rs 28.62 billion. Their plans focus on heritage preservation, youth empowerment, smart classrooms, healthcare, and infrastructure development. KMC’s delay raises governance concerns in the capital, while other metropolitan areas push forward with reform-driven agendas.
Eco-friendly Champadevi cable car project planned in Kirtipur to boost tourism
Champadevi Eco Friendly Company Pvt. Ltd. plans to build a 2.075 km cable car linking Kirtipur Municipality Ward No. 4 and Dakshinkali Municipality Ward No. 1. The Rs 5 billion project aims to serve 5,000 passengers daily using 34 gondolas, each with 10-person capacity. The upper station in Kirtipur will feature recreational facilities, a restaurant, and entertainment spaces, while nearby parking and a temple will be constructed. The company has submitted an Environmental Impact Assessment to the Ministry of Forests and Environment and pledged environmental safeguards, including tenfold tree planting and wildlife conservation. The project expects to generate 312 permanent and 300 temporary jobs.
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