KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is currently marked by excess liquidity and subdued private sector momentum, as bank deposits surge to record levels while credit demand remains weak, pushing interest rates downward and prompting banks to redirect funds toward share lending. Political uncertainty has weighed on the stock market, even as regulators tighten margin trading rules to enhance transparency.
At the same time, structural contrasts are evident: IT exports are expanding rapidly and renewable energy surveys signal long-term potential, yet capital spending remains sluggish, major infrastructure projects face chronic delays, and regulatory bodies like the telecom authority struggle with low budget utilization. Governance reforms, including contractor blacklisting and calls for stronger financial crime oversight, reflect attempts to address systemic weaknesses.
Overall, the outlook suggests an economy flush with liquidity and emerging digital strengths, but constrained by weak investment appetite, implementation gaps, and institutional inefficiencies.
Bank deposits surge to Rs 76.81 trillion amid weak credit demand
Deposits in Nepal’s banking system rose sharply by Rs 4.17 trillion in the first half of FY 2082/83, reaching Rs 76.81 trillion. However, private sector lending expanded by only Rs 1.97 trillion, leaving banks with ample liquidity. The surplus funds have driven lending rates down to 7.12%, while deposit rates have declined to 3.56%, reflecting subdued credit demand.
NEPSE drops 37.63 points as election uncertainty weighs on investors
The Nepal Stock Exchange (NEPSE) fell by 37.63 points (1.39%) last week amid investor caution ahead of the March 5 general election. The benchmark index opened at 2,708.70 and closed at 2,671.07, fluctuating between 2,655.30 and 2,728.43 during the week. Hydropower was the only gaining sector, edging up 0.32%, while hotels and tourism (-6.15%) and finance (-3.12%) posted the steepest declines. Ridi Power recorded the highest turnover at Rs 2.71 billion. Khani Khola Hydropower surged 27.14%, whereas Kalinchowk Darshan dropped 16.43%. Despite a 12.87% rise in total turnover to Rs 50.84 billion, market capitalization declined by Rs 63 billion to Rs 4.484 trillion.
Nepal’s IT exports reach Rs 1.45 trillion
Nepal’s IT service exports have climbed to Rs 1.45 trillion, nearly doubling within three years and signaling a structural shift in the economy. Traditionally dependent on agriculture, tourism, and remittances, the country is increasingly leveraging its skilled, English-speaking workforce and favorable time zone. With supportive policies, the IT Investment Decade initiative, and a goal of generating 500,000 jobs, Nepal aims to achieve Rs 30 trillion in exports over the next decade. Policy priorities include tax incentives, AI adoption, IT promotion mechanisms, infrastructure upgrades, and support for domestic firms to position IT as a key economic pillar.
Banks continue lowering deposit rates amid excess liquidity
In February, commercial banks further reduced fixed deposit rates, with the average maximum rate falling to 4.57% from 4.68% in January. Nine banks lowered rates as liquidity exceeded Rs 12 trillion and credit growth remained weak. Only five banks currently offer rates above 5%, mostly on long-term deposits. Global IME Bank, Siddhartha Bank, and Everest Bank were among those implementing notable reductions.
Nepal Telecom Authority spends only 11 percent of budget
The Nepal Telecommunication Authority utilized just 11% of its Rs 78.35 crore budget in the first half of FY 2082/83, reflecting administrative bottlenecks and sectoral challenges.
Commercial banks expand share loans as other sectors slow
With limited borrowing from traditional sectors, commercial banks have increased lending to the stock market. By mid-Poush FY 2082/83, 19 banks had issued Rs 129.68 billion in share loans, marking a 41.67% rise from the previous year. Nabil Bank led with Rs 16.95 billion, followed by Global IME Bank and Kumari Bank. Seventeen banks expanded share lending, while Citizens Bank and Nepal Bank reduced exposure. Agricultural Development Bank recorded the highest growth rate, while SBI Bank had the lowest share loan portfolio.
Non-life insurers invest Rs 64.28 billion across sectors
Fourteen non-life insurance companies invested Rs 64.28 billion during the first half of FY 2082/83. About 72% of investments were placed in term deposits with banks and financial institutions. Additional funds were allocated to government securities, listed shares, debentures, mutual funds, and sectors including hydropower, tourism, agriculture, education, and health. Rashtriya Beema led in total investment, followed by Siddhartha Premier, Sagarmatha Lumbini, and Neco Insurance.
Capital spending remains weak as government revises budget downward
Capital expenditure has reached just 15.62% of its allocation in the first seven months of FY 2025/26, compared to 19.42% during the same period last year. Of the Rs 407.88 billion allocated, only Rs 63.72 billion has been spent. Meanwhile, recurrent spending rose to Rs 562.37 billion. Total expenditure stands at Rs 801.37 billion, exceeding revenue by Rs 119.21 billion. Citing weak project preparation and administrative challenges, the government revised its annual expenditure estimate downward to Rs 1.688 trillion.
JICA Nepal fosters global volunteer collaboration
JICA Nepal hosted a cross-national volunteer event involving nearly 100 participants from international volunteer agencies. Marking 55 years of JICA’s volunteer program in Nepal, the initiative emphasized grassroots collaboration and long-term development partnerships.
SEBON tightens margin trading rules to enhance transparency
The Securities Board of Nepal (SEBON) has enforced the Margin Trading Facility Directive 2082, replacing the 2074 version to strengthen oversight and investor protection. Only companies with at least 2.5 million listed shares and consistent profitability qualify. Investors must maintain a 30% initial margin and 20% maintenance margin. Brokers require a minimum paid-up capital of Rs 20 crore and can lend up to five times their net worth, with mandatory daily reporting to SEBON.
Bagmati Rural Municipality sees Rs 15 million monthly milk economy
Bagmati Rural Municipality in Makwanpur has developed a thriving dairy economy, generating around Rs 15 million monthly from milk sales. Daily collection exceeds 6,500 liters through 11 cooperatives. Municipal investment and farmer support programs have significantly boosted production, doubling output since 2023/24.
Ghorahi–Tulsipur road becomes key election issue in Dang
The delayed Ghorahi–Tulsipur four-lane road has resurfaced as a central campaign agenda in Dang. A new government-funded contract signed in July 2025 aims to complete the Rs 2.52 billion project by 2028, with political leaders competing to claim credit for its revival.
Twenty contractors blacklisted for one year
The Public Procurement Monitoring Office has blacklisted 20 construction firms for failing to complete projects on time. The companies will be barred from participating in public procurement for one year under the Public Procurement Act.
Most national pride projects face prolonged delays
Out of 27 designated “National Pride” projects, only four have been completed, while the majority remain significantly delayed. Weak planning, political interference, and funding gaps continue to hamper progress in major infrastructure initiatives.
NRB governor calls for stronger oversight against financial crimes
Nepal Rastra Bank Governor Prof. Dr. Bishwanath Paudel has urged enhanced supervisory mechanisms to combat rising tech-driven financial crimes. He emphasized proactive anti-money laundering measures and stronger institutional capacity.
Reliance Spinning Mills challenges Nepse listing price range
Reliance Spinning Mills has criticized NEPSE’s assigned opening price range of Rs 100–300 per share as inconsistent with its book-building valuation, urging investors to consider its financial fundamentals.
Renewable energy survey permits issued for 9,787 MW
The Department of Electricity Development has granted survey permits for 220 renewable energy projects totaling 9,787 MW, primarily in hydropower, along with solar and wind initiatives.
Bank founders unable to divest shares despite legal provision
Despite legal provisions allowing phased conversion of founder shares into public shares, implementation delays have prevented founders from selling shares, raising governance concerns.
Nepal Oil Corporation plans provincial fuel depot in Surkhet
The Nepal Oil Corporation has initiated plans to construct a provincial fuel storage facility in Surkhet to strengthen supply security in Karnali Province. The depot, expected by FY 2027/28, will store diesel and petrol to reduce dependence on same-day tanker deliveries.
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