KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s latest economic and policy developments present a mixed picture of emerging opportunities alongside persistent structural weaknesses. The government is attempting to stimulate entrepreneurship, industrial growth, digital innovation, and infrastructure development through tax incentives, regulatory reforms, urban modernization plans, and new investment initiatives.
Strong tourism inflows from India, rising industrial registrations, expanding digital banking services, and improved technology infrastructure indicate growing momentum in key sectors. However, underlying challenges remain significant.
Excess liquidity in the banking system, declining deposit rates, regulatory shortcomings in banks’ risk management, fertilizer shortages affecting farmers, and export disruptions in the tea industry highlight continuing inefficiencies in economic governance and supply chains.
While new hydropower royalty guidelines, petroleum infrastructure projects, and provincial development programs signal a push toward long-term growth, low industrial capacity utilization and recurring implementation gaps suggest that Nepal’s economic progress will depend less on announcing new policies and more on improving execution, regulatory oversight, and productive investment absorption across the economy.
Finance Minister announces incentives and tax relief for young entrepreneurs
Finance Minister Swarnim Wagle has said the government is committed to creating opportunities that reduce the need for young Nepalis to seek prospects abroad. Speaking at the National Youth Entrepreneurship Conference 2026 in Kathmandu, he stated that the newly introduced budget has laid the groundwork for supporting youth entrepreneurship through targeted incentives and tax concessions. According to the minister, the government aims to deliver meaningful progress in this area over the next five years.
Gold and silver prices move higher in domestic market
Gold and silver prices increased in Nepal’s bullion market on Sunday, according to the Federation of Nepal Gold and Silver Dealers’ Association. The price of fine gold rose by Rs 1,200 per tola to reach Rs 293,200, while silver also gained value, climbing to Rs 4,895 per tola. The rise reflects ongoing fluctuations in international precious metals markets and continues a broader trend of elevated bullion prices in recent months.
NRB report highlights weaknesses in banks’ risk management practices
Nepal Rastra Bank’s latest supervisory report has revealed significant shortcomings in the banking sector’s risk assessment and regulatory compliance practices. The report indicates that several banks have been understating their actual risk exposure by taking advantage of loopholes in the classification of loans under the Regulatory Retail Portfolio category. Instead of applying comprehensive risk evaluation standards, institutions have relied on a single threshold criterion to secure lower risk weights. The central bank also identified serious deficiencies in the Internal Capital Adequacy Assessment Process (ICAAP), with many banks failing to carry out required annual capital reviews and repeatedly missing regulatory reporting deadlines.
Banks lower deposit rates as excess liquidity exceeds Rs 1 trillion
Commercial banks have reduced deposit interest rates for the mid-June to mid-July period as deposit growth continues to outpace loan demand. Seven of the country’s 20 commercial banks cut their rates, while the remaining 13 left them unchanged. With excess liquidity in the banking system exceeding Rs 1 trillion and Nepal Rastra Bank maintaining a minimum savings deposit rate of 2.75 percent, banks have focused on lowering fixed deposit rates to reduce funding costs. As a result, the average maximum interest rate on individual fixed deposits declined from 4.34 percent to 4.27 percent over the past month.
Tea industry prepares shutdown as export disruptions persist
Tea producers in Nepal have announced a temporary shutdown of their operations after exports were blocked for more than six weeks due to delays in quality testing procedures imposed by India. Industry representatives say the prolonged disruption has left large volumes of tea unsold and at risk of deterioration. All 56 tea processing industries in Ilam are scheduled to close from Monday, while 30 factories in Jhapa will suspend operations from Wednesday. The sector directly supports around 100,000 workers and 30,000 farming households.
Govt calls for adherence to hydropower royalty-sharing guidelines
The government has urged stakeholders to follow the established framework for distributing royalties generated by hydropower projects. The Department of Electricity Development stated that royalty allocation should be determined based on a combination of project location, the size of affected local government areas, and the population impacted by project activities. Under the proposed formula, geographical location accounts for 50 percent of the distribution criteria, while affected area and population each contribute 25 percent.
Government invites public feedback on petroleum pipeline EIA
The government has requested public comments on the Environmental Impact Assessment (EIA) prepared for the proposed Siliguri–Jhapa petroleum pipeline and associated fuel storage terminal. The project, proposed by Nepal Oil Corporation, is currently undergoing the approval process. Once completed, the pipeline will become Nepal’s second cross-border petroleum transmission system and is expected to improve fuel supply efficiency and logistics infrastructure.
Kathmandu Metropolitan City unveils policy priorities for fiscal year 2026/27
Kathmandu Metropolitan City (KMC) has announced its policies and programs for fiscal year 2026/27, outlining a long-term vision for a more inclusive, technologically advanced, environmentally sustainable, and innovation-driven capital. Presenting the policy document during the 19th Municipal Assembly session, Acting Mayor Sunita Dangol emphasized the continuation of the city’s “Cultural City, Prosperous Metropolis” agenda. The plan prioritizes the preservation of Kathmandu’s cultural heritage while promoting modern urban development, with a commitment to completing ongoing multi-year projects and improving the quality of urban services.
Private sector authorized to import chemical fertilizers
The government has opened fertilizer imports to the private sector after procurement through international tenders failed to proceed as planned. The Ministry of Agriculture, Forests and Environment has granted import permits to 77 businesses and companies under the Chemical Fertilizer Control Order, 1998. The approved firms will be allowed to import a range of agricultural nutrients and fertilizer products, primarily excluding major commodities such as urea, DAP, and potash.
Supreme Court rules pension service extension is a management decision
The Supreme Court has clarified that extending an employee’s service period to meet pension eligibility requirements at Nepal Rastra Bank is subject to management discretion rather than an employee entitlement. The ruling came while dismissing a petition filed by former NRB Executive Director Bamdev Sigdel. According to the court, management may grant up to five additional years of service to eligible employees who meet performance and service criteria, but such extensions cannot be claimed as a legal right.
Older driving licences among backlog may not be printed immediately
The Department of Transport Management has announced that approximately 350,000 older driving licences from a backlog of 2.9 million documents will not be printed immediately due to their limited remaining validity period. Officials stated that licences with less than one year of validity left will generally be printed only after renewal, although urgent requests may be accommodated. The measure is intended to improve efficiency and reduce unnecessary printing costs.
More than 460 new industries registered in first half of fiscal year
A total of 461 small, medium, and large industries were registered across Nepal during the first six months of the current fiscal year. Bagmati Province accounted for the vast majority of registrations with 363 industries, while Sudurpashchim Province recorded only four. The newly registered industries attracted proposed foreign investment of Rs 55.83 billion and are expected to generate employment for 22,885 people. Despite the growth in registrations, average industrial capacity utilization remained low at 42.11 percent during the review period.
Pokhara sees record tourism surge driven by Indian visitors
Pokhara is witnessing exceptionally high tourist arrivals from India, pushing hotel occupancy rates close to 90 percent and revitalizing what has traditionally been considered the monsoon off-season. The influx has been fueled by extreme summer temperatures in India and extensive promotion through social media platforms. Popular attractions such as Phewa Lake, Mardi Himal, and Annapurna Base Camp are experiencing unusually high visitor numbers, while religious destinations including Muktinath have attracted large numbers of Indian pilgrims. The trend highlights the growing importance of the Indian market to Nepal’s tourism industry.
Sudurpashchim Provincial Assembly approves annual policy and programme
The Sudurpashchim Provincial Assembly has endorsed the provincial government’s policy and programme for fiscal year 2026/27 by majority vote. The policy framework, originally presented by Province Chief Najir Miya and later tabled for approval by Chief Minister Kamal Bahadur Shah, outlines the government’s development priorities and policy direction for the upcoming fiscal year. The endorsement paves the way for the preparation and implementation of the province’s annual budget.
Humla benefits from rising Mansarovar pilgrimage traffic
More than 3,700 Indian pilgrims have traveled through Humla on their way to Mount Kailash and Lake Mansarovar in Tibet since the start of this year’s pilgrimage season. According to local authorities, arrivals via the Nepalgunj–Simikot route have significantly boosted economic activity in the district. Hotels are operating at full capacity, local transport and porter services have seen increased demand, and farmers are benefiting from stronger sales of agricultural products. The pilgrimage season has emerged as an important source of income for the remote Himalayan district.
Ncell data center earns international Tier III certification
Ncell’s Integrated Data Center has received the internationally recognized ANSI/TIA-942-C Rated 3 Design and Constructed Facility Certification, commonly known as Tier III certification. The company said the achievement reflects the facility’s high standards of reliability, operational resilience, and security. The data center is also notable for being Nepal’s first government-listed data center and cloud services facility, marking a significant milestone in the country’s digital infrastructure development.
Purbanchal Lube Oil reports Rs 675 million turnover in first nine months
Purbanchal Lube Oil generated revenue of Rs 675 million during the first nine months of the current fiscal year, continuing a trend of steady business growth in recent years. Although the company recorded higher annual turnover figures in previous fiscal years, it has maintained solid profitability and financial stability. Current cash reserves stand at Rs 89 million, reflecting a relatively strong liquidity position despite a slight decline in profit margins compared to earlier periods.
Kumari Bank introduces Nepal’s first ERP-based digital lending platform
Kumari Bank has launched an integrated digital lending platform that enables customers to access unsecured loans directly through enterprise resource planning (ERP) software. Developed in partnership with IMS Software Pvt. Ltd., the platform is designed to streamline the lending process by reducing paperwork and minimizing the need for branch visits. The initiative represents a significant step forward in the digital transformation of Nepal’s banking sector.
Farmers in Kavrepalanchok struggle with fertilizer shortages
Farmers in Kavrepalanchok are facing a shortage of chemical fertilizers during a critical period of maize cultivation and paddy planting. The supply shortfall, which has become a recurring problem in recent years, has affected agricultural activities across the district and beyond. Farmers blame the situation on the government’s inability to ensure adequate fertilizer distribution through state-owned suppliers, including Agriculture Inputs Company Limited and Salt Trading Corporation, raising concerns about potential impacts on crop productivity.
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