KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is showing a mix of resilience and structural fragility. While the stock market saw slight recovery driven by hydropower and finance, investor confidence remains tepid despite surging margin loans and rising trading volumes.
A record inflow of remittances has boosted liquidity, yet commercial bank profits are under pressure from loan losses. Policy shifts—such as the forced transfer of employee funds—are disrupting banking stability.
Meanwhile, governance efforts like NRB’s reform task force and the Gwarko flyover completion contrast with rural struggles, including fertiliser shortages and industrial closures. Economic momentum hinges on post-Asar policy clarity and investor sentiment.
Nepal stock market posts mild recovery; key gains in hydropower, finance, tourism
The NEPSE index climbed 0.55% this week, closing at 2,655.38 with a rise of 14.42 points. Trading volumes grew nearly 39%, with daily turnover averaging Rs. 10.08 billion. Hydropower led the gains at 5.51%, followed by finance and tourism. Despite gains in six sectors, seven declined, with trade taking the biggest hit. Market capitalization added Rs. 24 billion, yet cautious investor sentiment persists despite growing retail participation and trade momentum.
Financial sector earns Rs. 53 billion; commercial banks dominate profits
By the end of Baisakh, Nepal’s financial sector posted a Rs. 53.09 billion profit, with commercial banks generating 90% of it. Development banks and finance companies trailed behind. Analysts warn that weak performance by smaller institutions could destabilize the sector, particularly amid ongoing regulatory and economic pressures.
Loan losses squeeze commercial banks’ profits
Nepal’s commercial banks recorded a 1.67% drop in average profit over the first ten months of FY 2081/82 due to rising loan defaults and provisioning. Total profits reached Rs. 47.79 billion, slightly below last year’s Rs. 48.60 billion. NIC Asia saw the steepest decline, while Nepal Bank reported a dramatic rebound. Overall profitability remains fragile.
Gwarko Flyover structure completed; public vehicles to operate soon
The main construction of Lalitpur’s Gwarko Flyover is finished, with only minor work pending. Authorities confirmed it will open to public transport shortly, easing traffic flow between Koteshwor and Gwarko. Delays were attributed to the novelty of such infrastructure in the region.
Inbound and outbound remittances surge; economy remains remittance-dependent
Remittances remain vital for Nepal’s economy due to sluggish industrial growth. Inbound transfers rose 13% year-on-year to Rs. 1.356 trillion. At the same time, outbound remittances by foreign workers in Nepal also surged 54.5%, totaling Rs. 8.46 billion. These workers, mainly employed in hydropower, IT, and construction, are permitted to send up to 75% of their earnings abroad.
Most banks hold fixed deposit rates steady; few trim offers for Asar
For the month of Asar, 14 of 19 commercial banks kept their fixed deposit rates unchanged, while five reduced them. Kumari Bank now offers the lowest rate at 5.71%. Most institutions continue to offer between 5.5% and 6.6%, suggesting stable yet cautious liquidity management. A few development banks also made minor rate adjustments.
Record remittances inject Rs. 700 billion into banking system
A sharp increase in remittances has added around Rs. 700 billion in liquidity to Nepal’s banking sector. In Baisakh alone, the country received a record Rs. 165 billion. Cumulatively, Rs. 1.356 trillion in remittances entered Nepal in the first ten months of the fiscal year. Banks have deposited Rs. 400 billion with the central bank, and NRB has absorbed over Rs. 390 billion using various monetary tools.
Kavrepalanchok faces severe fertiliser shortage during peak season
Farmers in Kavrepalanchok are again grappling with a fertiliser shortage amid high demand. With official supplies meeting only 17.5% of demand, many are forced to buy urea at up to Rs. 2,500 per sack in the black market, far above the subsidized price. Officials aim to supply 1,500 tonnes immediately and plan for 19,500 tonnes next fiscal year.
New NRB governor pledges inclusive, transparent banking reforms
Newly appointed NRB Governor Bishwanath Paudel has vowed to build a more inclusive, stable, and transparent banking system. At his inaugural speech, he emphasized policy continuity with selective reforms. His predecessor, Maha Prasad Adhikari, highlighted progress during his term and promised to continue contributing through his experience.
NRB sets up reform task force under Dr. Karki
Nepal Rastra Bank has created a three-member committee led by Dr. Rewat Bahadur Karki to recommend sweeping banking sector reforms. The task force will address six key areas including regulatory modernization, rural credit, merger challenges, and the central bank’s role in capital markets. The committee has one month to submit its proposals.
Share-backed loans hit Rs. 1.25 trillion, but stock market momentum remains weak
Share mortgage lending by banks in Nepal reached Rs. 1.25 trillion by end of Baisakh 2082, with commercial banks holding the bulk. Despite this growth, NEPSE hovers around 2,600 points. Loans exceeding Rs. 10 million rose sharply, yet market sluggishness persists due to investor caution, political instability, and budget-related uncertainties. A rebound is expected post-Asar.
Finance Minister urges collective climate action
Finance Minister Bishnu Prasad Paudel called for unified national efforts to combat pollution and safeguard the environment. Speaking at an EV rally in Kathmandu, he underlined the government’s commitment to climate-friendly policies and sustainable development. He also praised initiatives like Sagarmatha Samaad for global climate advocacy.
Government move to phase out internal employee funds alarms banks
A new policy requires banks to shift their in-house employee funds to state-run institutions by Asar 2083. The mandate affects seven major banks managing nearly Rs. 100 billion. Uncertainty over fund security has caused panic among employees, some of whom have opted for early retirement.
Four Kavre industries shut down over tax evasion
Authorities in Mandandeupur, Kavrepalanchowk, have sealed four industrial operations due to unpaid taxes and registration issues. The closures follow multiple warnings, and businesses can only reopen upon clearing dues and complying with local regulations.
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