KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s economy is entering the new fiscal year with a strong policy push focused on stimulating growth, improving investment conditions, and strengthening public finances. The government has introduced revised income tax slabs, new indirect taxes, higher public sector salaries, and procurement reforms, while Nepal Rastra Bank has eased lending regulations by raising loan-to-value limits for electric public vehicles and share-backed loans, and allowing banks greater flexibility in recognizing interest income.
These measures are expected to support liquidity, credit expansion, and private investment. The NEPSE’s modest gain reflects cautious investor optimism, although continued cuts in deposit interest rates highlight weak private-sector credit demand and persistent excess liquidity in the banking system. Progress in cross-border energy cooperation with India, infrastructure development, fertilizer distribution, and efforts to revive state-owned industries demonstrate a continued focus on long-term productive capacity.
However, customs disruptions affecting exports, governance lapses, and political uncertainty in Sudurpaschim underscore implementation risks that could slow economic momentum despite an increasingly supportive policy environment.
NEPSE gains 7.50 points as turnover reaches Rs 4.562 billion
The Nepal Stock Exchange (NEPSE) index climbed 7.50 points to close at 2,597.80 on Thursday, ending the session 0.28 percent higher than the previous trading day after fluctuating throughout the day. The Sensitive Index also advanced by 2.92 points to settle at 456.86. A total of 9,469,099 shares of 371 listed companies changed hands through 39,595 transactions, generating turnover of Rs 4.562 billion. Nine of the 13 sectoral indices ended higher, with mutual funds and microfinance posting the strongest gains, while four sectors closed lower.
Govt implements revised income tax thresholds under the Income Tax Act, 2002
The Ministry of Finance has announced the implementation of revised personal income tax rates under the Economic Act, 2026, effective from July 17. The tax-free income threshold for individuals has been raised from Rs 500,000 to Rs 1 million, with annual earnings up to Rs 1 million subject only to a 1 percent social security tax under the Income Tax Act, 2002. The highest personal income tax rate has been reduced from 39 percent to 29 percent. Income between Rs 1 million and Rs 1.5 million will be taxed at 10 percent, while earnings above Rs 4 million will incur an additional 2 percent tax.
NRB allows banks to recognize interest received within 15 days
Nepal Rastra Bank (NRB) has revised the Unified Directives 2026, allowing banks and financial institutions to treat interest collected within 15 days after the close of the fiscal year as income. Under the updated provision, only interest that remains unpaid after the 15-day grace period must be transferred to the regulatory fund following the required statutory deductions. Once the outstanding interest is recovered, the amount may be transferred back to retained earnings.
NRB raises loan-to-value ratio to 80 percent for large electric public vehicles
Nepal Rastra Bank (NRB) has amended the Unified Directives 2026 to improve financing access for public transportation. Under the revised rules, banks and financial institutions can now finance up to 80 percent of the value of large electric passenger vehicles used for public transport. The previous loan-to-value limit was 60 percent, making the latest revision a 20 percentage point increase. The measure is intended to encourage greater investment in clean-energy public transportation.
Gold rises to Rs 285,200 per tola as silver declines
Gold prices increased in the domestic market on Thursday, while silver prices fell. According to the Federation of Nepal Gold and Silver Dealers’ Association, the price of gold rose by Rs 400 per tola (11.66 grams) to reach Rs 285,200, up from Rs 284,800 the previous day. In contrast, silver dropped by Rs 90 per tola and is now trading at Rs 4,325, compared to Rs 4,415 on Wednesday.
Commercial banks reduce deposit interest rates for July 17–August 16
Commercial banks have further lowered deposit interest rates for the period from July 17 to August 16, citing weak credit demand and abundant liquidity in the banking system. During fiscal year 2025/26, deposits increased by around Rs 1,000 billion, whereas lending expanded by only Rs 400 billion, leaving banks with more than Rs 1,320 billion in excess funds parked at Nepal Rastra Bank. To reduce funding costs, six major banks—NMB, Kumari, Standard Chartered, Citizens, Global IME, and Rastriya Banijya Bank—cut their deposit rates. As a result, the average maximum interest rate on individual fixed deposits declined from 4.26 percent to 4.17 percent.
Civil servants to receive 21 percent salary increase from July 17
The Ministry of Finance will introduce a cumulative 21 percent salary increase for government employees from July 17, in line with the fiscal year 2026/27 budget. The revision combines a 10 percent rise in basic pay with a 10 percent performance-based monthly incentive. Under the new pay structure, the Chief Secretary’s basic monthly salary will increase from Rs 77,211 to Rs 84,932, bringing total monthly earnings to Rs 98,425 including allowances. Office assistants will see their basic salary rise from Rs 27,611 to Rs 30,372. Similar proportional adjustments will also apply to personnel in the Nepal Police, Armed Police Force, and public schools.
Rasuwagadhi Customs collects over Rs 15 billion from electric vehicle imports
Imports of electric vehicles through the Rasuwagadhi customs point rose sharply during fiscal year 2025/26 amid growing domestic demand. More than 6,500 electric cars, jeeps, vans, and minibuses manufactured in China entered Nepal through Kerung. The surge generated more than Rs 15 billion in customs revenue from electric vehicle imports alone, accounting for over 60 percent of the Rasuwa Customs Office’s total collections. Demand remained strong despite minor tax revisions. However, after authorities uncovered an attempt to clear 200 vehicles before their arrival, the Ministry of Finance suspended 13 officials, including the chief customs officer.
Cabinet approves minting of new one-rupee and two-rupee coins
The Ministry of Information and Communications announced that the Cabinet has approved the production of newly designed one-rupee and two-rupee coins. Under the decision, Nepal Rastra Bank has been authorized to proceed with minting the new coins, which will feature updated designs and enhanced security features. The move is intended to improve the management of low-denomination currency in circulation.
Customs dispute causes more than Rs 13 million in losses at Tribhuvan Airport
Export operations at the Tribhuvan International Airport Customs Office have been disrupted after cargo movement was halted due to jurisdictional disagreements involving security personnel. Exporters say more than 100 tonnes of customs-cleared goods remain stranded in warehouses, causing losses exceeding USD 100,000, or roughly Rs 13.3 million, because of canceled cargo bookings and weather-related damage. While exporters accuse security agencies of interfering with legally cleared shipments, airport security officials argue that logistics companies failed to obtain the required warehouse permits and breached standard security protocols. Coordination meetings held on Thursday ended without a resolution.
Prime Minister Balen pledges support for women entrepreneurs
Prime Minister Balendra Shah (Balen) on Thursday reiterated the government’s commitment to promoting women-led businesses by easing administrative procedures and expanding opportunities for locally produced goods at key tourist destinations. During a meeting with a delegation from the Federation of Woman Entrepreneurs’ Associations of Nepal led by President Darshana Shrestha, he encouraged the organization to further strengthen its “Ma Udhyami” (I Am an Entrepreneur) campaign. The delegation called on the government to improve market access, prioritize women-owned businesses in public procurement, offer alternative collateral options, and ensure women’s participation in policymaking.
Ministry begins asset valuation of Butwal Yarn Factory
The Ministry of Industry, Commerce, and Supplies has launched a comprehensive due diligence assessment of the Butwal Yarn Factory, which has remained closed since 2008. Backed by the Asian Development Bank, a technical team inspected the factory and found that more than 60 percent of its machinery must be replaced. Established in 1983, the state-owned factory once employed over 550 permanent workers. The valuation supports the fiscal year 2026/27 budget policy to revive loss-making public enterprises through public-private partnership models.
Govt imposes 5 percent VAT on electricity and ride-sharing services
The Ministry of Finance has introduced new tax measures under the Economic Act, 2026, effective from July 17. Under the new provisions, the Nepal Electricity Authority will collect a 5 percent Value Added Tax (VAT) from households consuming more than 50 units of electricity per month, while digital ride-sharing services will also be subject to a 5 percent VAT. The policy further introduces a 3 percent equity fee on private education and health services, a 2 percent luxury tax on five-star hotels and resorts, and doubles the annual casino royalty from Rs 15 million to Rs 30 million.
Sudurpaschim government loses majority amid budget dispute
The ruling coalition in the Sudurpaschim Province Assembly has collapsed following disagreements over the provincial budget between the Nepali Congress and CPN (UML). The chief minister dismissed four ministers from the coalition partner after they refused to withdraw proposals seeking cuts to planned budget expenditures for fiscal year 2026/27. In response, CPN (UML) formally withdrew its support, reducing the government to a minority with only 18 seats, short of the 29 required for a majority. The political deadlock threatens to delay provincial spending just one day before the constitutional deadline for budget approval.
Govt enforces 15th amendment to public procurement regulations
The government has published the 15th amendment to the Public Procurement Regulations, 2007, in the Nepal Gazette to facilitate the completion of delayed development projects. The revised Public Procurement Regulations, 2026, replace the previous Rule 120, allowing a final extension for projects that have achieved at least 50 percent physical progress but were delayed due to budget shortages or compensation-related issues during fiscal year 2025/26. Contractors must apply within 30 days without seeking additional financial compensation. Those who fail to complete the projects risk forfeiting their performance bonds and being blacklisted under Section 63 of the Public Procurement Act, 2006.
Lottery held for selection of Nepali caregivers for Israel; 836 candidates shortlisted
The lottery to select eligible Nepali auxiliary workers for employment in Israel’s caregiving sector was conducted successfully on Thursday through a live broadcast from the Population and Immigration Authority (PIBA) Office in Jerusalem. The selection process was carried out in a transparent manner in the presence of senior Israeli officials, the Ambassador of Israel to Nepal, representatives from Nepal’s Department of Foreign Employment, and members of the media, who observed the proceedings via live broadcast. A total of 1,115 candidates participated in the lottery, including 784 men and 331 women. Seventy-five percent of candidates from each category were selected, resulting in a shortlist of 836 candidates.
Salt Trading Corporation’s Chitwan branch distributes subsidized fertilizers
The Chitwan branch of Salt Trading Corporation distributed 35,838 bags of urea, 44,944 bags of DAP, and 4,943 bags of potash fertilizer during the current fiscal year. The branch is currently selling 9,200 bags of urea and 1,000 bags of DAP, while maintaining stocks of 7,802 bags of urea, 2,866 bags of DAP, and 12,425 bags of potash. Prices remain fixed at Rs 847 per 50 kg bag of urea, Rs 2,297 for DAP, and Rs 1,697 for potash. The corporation also plans to introduce the Farmer Management System to digitize fertilizer transactions.
Nepal and India expand 400 kV transmission network and power trade
Senior energy officials from Nepal and India have agreed to strengthen cross-border electricity trade and transmission infrastructure following high-level talks held on July 15. The 13th Joint Steering Committee meeting, co-chaired by Indian Power Secretary Pankaj Agarwal and Nepali Energy Secretary Sarita Dawadi, endorsed expanding the capacity of the Dhalkebar-Muzaffarpur 400 kV transmission line. The agreement raises Nepal’s electricity export limit to 1,650 MW and import capacity to 1,400 MW. It also approved the Motihari-Nijgadh 400 kV and Chameliya-Jauljibi 220 kV transmission projects, both targeted for completion by December 2028. Meanwhile, the Gorakhpur-New Butwal 400 kV line will temporarily operate at 220 kV between August 2026 and December 2027.
Krishi Samagri Company supplies 969 metric tons of fertilizer in Bharatpur
The Bharatpur branch of Krishi Samagri Company distributed 969.175 metric tons of subsidized chemical fertilizers through 278 registered cooperatives during the first 15 days of the paddy planting season using an online monitoring system. The distribution included 668.200 metric tons of urea, 201.800 metric tons of DAP, and 99.175 metric tons of potash. Bharatpur Metropolitan City recorded the highest demand, consuming 239.150 metric tons of urea, 197.050 metric tons of DAP, and 22.225 metric tons of potash. To meet increased demand, the branch also released 8.200 metric tons of urea and 4.050 metric tons of DAP from its emergency reserve stock.
Bhaktapur Transport Office collects over Rs 198 million from driving licenses
The Transport Management Office in Bhaktapur generated more than Rs 198.2 million in revenue over the past three months through the distribution of 90,000 driving licenses. During the same period, the office printed 238,000 licenses, of which 90,000 have already been delivered to applicants. It is currently issuing between 1,000 and 1,800 driving licenses each day.
Govt allocates Rs 3.5 billion for Nawalparasi district headquarters project
The Ministry of Urban Development has accelerated construction of a model district headquarters in Kawasoti Municipality-3 of Nawalparasi (Bardaghat Susta Purba), covering approximately 124.61 hectares. The project includes two major construction contracts worth Rs 270 million and Rs 3.5 billion to build 45 accessible public buildings. The first phase, which includes integrated offices for postal, revenue, and treasury services, has reached 50 percent physical completion. The master plan also reserves 21.59 percent of the area for open spaces, sports facilities, and parking for up to 950 vehicles.
Tree felling begins for Damauli-Bharatpur 220 kV transmission line
Tree clearance has started in Chitwan for the construction of the Damauli-Bharatpur 220 kV transmission line under the Tanahun Hydropower Project. The project began clearing work after receiving approval on May 8 to remove at least 1,263 trees from community and national forests within Bharatpur Metropolitan City. Overall, the Cabinet-approved project permits the felling of 9,127 trees across Chitwan and Tanahun districts. India’s KEC International is constructing the 35-kilometre transmission line package, which has reached 81 percent physical completion.
NRB raises share-backed loan limit to 80 percent
Nepal Rastra Bank (NRB) has revised its unified directives in line with the latest monetary policy, allowing banks and financial institutions to increase the loan-to-value ratio on share-backed loans from 70 percent to as much as 80 percent. Institutions can provide the higher limit by developing dedicated lending products that evaluate the financial strength of listed companies. NRB has instructed banks to publish these product guidelines on their websites and clarified that pledged shares cannot be revalued later to justify additional borrowing.
Salt Trading Corporation’s Chitwan branch distributes subsidized fertilizers
The Chitwan branch of Salt Trading Corporation distributed 35,838 bags of urea, 44,944 bags of DAP, and 4,943 bags of potash fertilizer during fiscal year 2026/27. The branch is currently selling 9,200 bags of urea and 1,000 bags of DAP, while holding stocks of 7,802 bags of urea, 2,866 bags of DAP, and 12,425 bags of potash. Prices are fixed at Rs 847 per 50 kg bag of urea, Rs 2,297 for DAP, and Rs 1,697 for potash. The corporation also plans to implement the Farmer Management System to digitize fertilizer distribution and sales.
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