KATHMANDU: Economic Digest presents a brief yet comprehensive roundup of major business developments in Nepal, delivered in clear and accessible summaries.
Nepal’s economic picture presents a mixed but revealing pattern: domestic credit is recovering, with banks adding nearly Rs 63 billion in lending in one month, while more than 8 million people now hold Demat accounts, indicating broadening participation in financial markets. The government is also expanding its role through Rs 2.14 billion in startup loans and plans for a Rs 100 billion infrastructure development fund, although the high level of outstanding concessional loans raises questions about credit utilisation and programme effectiveness.
At the same time, Nepal continues to struggle to convert foreign investment commitments into actual inflows, highlighting persistent barriers to investment implementation. External pressures are also significant, with India’s higher tariff on Nepali jute products threatening an industry employing around 15,000 people, while dependence on Indian onions exposes consumers to price shocks.
Severe weather compounded these challenges, damaging electricity infrastructure, disrupting telecommunications, tourism and transport, and causing major economic losses. The government and public agencies are responding with emergency preparations, infrastructure restoration and policy measures, but the scale of disruption underscores Nepal’s vulnerability to climate-related shocks. Meanwhile, more Nepalis are leaving for foreign employment, reflecting continued dependence on overseas labour markets. Overall, the data suggest an economy experiencing financial expansion alongside structural weaknesses, external vulnerabilities and growing climate-related risks.
Gold price rises by Rs 700 per tola on Sunday
The price of gold increased by Rs 700 per tola (11.66 grams) in the domestic market on Sunday, according to the Federation of Nepal Gold and Silver Dealers’ Association. Gold was traded at Rs 299,300 per tola on Sunday, up from Rs 298,600 on Friday. The price of silver also increased by Rs 35 per tola to Rs 4,655. Silver was traded at Rs 4,620 per tola on Friday.
Bank lending rebounds, with nearly Rs 63 billion added in one month
Bank lending has shown a strong recovery, with commercial banks extending nearly Rs 63 billion in additional credit during the second month of fiscal year 2026/27, according to Nepal Rastra Bank data. By mid-September, the 20 commercial banks had extended a total of Rs 5.350065 trillion in loans, up from Rs 5.287 trillion by mid-August. Credit expansion was positive at most commercial banks during the period. Of the 20 banks currently in operation, 15 increased their lending, while five recorded negative credit growth.
Only 30 percent of FDI commitments translate into actual investment
Despite substantial commitments for foreign direct investment (FDI), only around 30 percent of the pledged amount has actually entered Nepal, according to Nepal Rastra Bank. In fiscal year 2025/26, Nepal received FDI commitments worth Rs 58 billion, while actual inflows amounted to Rs 2.849 billion. Actual FDI inflows stood at Rs 1.202 billion in the previous fiscal year. FDI inflows doubled in 2025/26 compared with the previous year, with the increase recorded despite the Gen Z protests during the fiscal year. Similarly, Nepal approved FDI worth Rs 64 billion in fiscal year 2024/25, but actual inflows amounted to only Rs 1.202 billion. In 2023/24, commitments worth Rs 62 billion were made, while actual FDI inflows stood at Rs 850 million. In 2022/23, Nepal received Rs 920 million from approved FDI proposals worth Rs 32.48 billion.
Over Rs 65 billion in concessional loans approved, but more than half remains outstanding
Banks and financial institutions have approved more than Rs 65 billion in concessional loans under the government’s interest subsidy programme aimed at boosting production and employment. However, more than half of the approved amount remains outstanding, raising questions about the programme’s effectiveness and the utilisation of the loans. According to Nepal Rastra Bank, as of mid-August 2026, concessional loans worth Rs 65.403336 billion had been approved for 43,051 borrowers. Of the total, more than Rs 32.9709 billion remains outstanding. The government has also provided substantial interest subsidies to lower the cost of concessional borrowing. Nepal Rastra Bank data shows that more than Rs 39.27 billion in interest subsidies has been disbursed so far.
More than 8 million investors have Demat accounts
Participation in Nepal’s capital market continues to grow, with more than 8.095 million people having opened Demat accounts as of Saturday, according to the latest data from CDS and Clearing Limited (CDSC). The number of Mero Share users is lower than the number of Demat account holders. While 8.095 million people have Demat accounts, 7.186 million are registered as Mero Share users. Of the Mero Share users, 5.122 million are active, while 2.972927 million are inactive. Active users account for 71.40 percent of total Mero Share accounts.
Govt moves to establish Rs 100 billion infrastructure development fund
The government has moved forward with plans to repeal the three-decade-old Town Development Fund Act, 1996, and establish an Infrastructure Development Fund with authorised capital of Rs 100 billion under a new legal framework. The Ministry of Physical Infrastructure and Transport has prepared a draft concept paper for a bill aimed at amending and consolidating laws governing the Infrastructure Development Fund. The Cabinet has given in-principle approval to the concept paper. The proposed framework seeks to transform the existing Town Development Fund in line with Nepal’s federal structure and mobilise additional capital. The government has concluded that the existing Town Development Fund Act is inadequate to meet the needs of federal, provincial and local governments because it does not clearly define the fund’s capital structure and places full ownership with the government. Once the proposed law comes into force, ownership of the fund would be expanded to include the federal, provincial and local governments, as well as national and international financial institutions.
Floods disrupt 1,303 MW of electricity supply across Nepal
Continuous rainfall, floods and landslides have caused extensive damage to Nepal’s energy infrastructure, resulting in cumulative losses of around 1,303 megawatts of electricity generation and supply across central and western parts of the country. According to the Ministry of Energy, faults in transmission lines and submerged facilities caused widespread power disruptions in Pokhara, Butwal, Hetauda and Kathmandu. The Pokhara corridor was among the hardest hit, with more than 400 MW affected as flooding halted major projects, including Kaligandaki, Upper Madi and Modi. Tripping of 220 kV transmission lines affected an additional 355 MW. Grid damage and forced industrial load cuts also disrupted industrial corridors in Birgunj, Simara and Butwal, while brief overloads affected the Patan and Teku substations in Kathmandu. Officials clarified that the 1,303 MW figure represents cumulative daily losses rather than a single nationwide blackout. Repair teams are working to restore the damaged network.
Bhotekoshi floods cause over Rs 52 billion damage to Bagmati tourism sector
The floods along the Bhotekoshi-Trishuli corridor on August 26 caused more than Rs 52 billion in damage to the tourism sector of Bagmati Province, according to the Nepal Tourism Board (NTB). The flooding damaged more than 142 tourist-standard, small and medium-sized hotels and over 65 restaurants across the province. The disaster also caused significant loss of life among tourism-sector workers. More than 188 guides, porters and support staff reportedly lost their lives, while records show that 214 hotel employees died in the floods.
Higher Indian tariff puts Nepal’s jute industry at risk
Nepal’s jute industry is facing the threat of closure after India raised its anti-dumping duty on finished jute products from Nepal from 4 percent to 16 percent, effective September 25. The fourfold increase follows a recommendation from India’s Directorate General of Trade Remedies (DGTR). Nepali industrialists say they cannot operate competitively under the 16 percent tariff, particularly as Bangladeshi exports and Indian manufacturers face different tariff conditions. Despite lobbying by Nepali officials and business representatives, Indian authorities proceeded with the tariff increase. The move directly affects the Sunsari-Morang Industrial Corridor, where six surviving jute mills employ around 15,000 workers. Last fiscal year, the mills imported raw jute worth approximately Rs 6 billion from India and Bangladesh and exported finished products worth Rs 10.66 billion—including hessian cloth, sacks and twine—to the Indian market.
NEA steps up preparations to maintain power supply amid severe weather
Amid the risk of damage to electricity transmission and distribution infrastructure from continuous rainfall, floods, landslides, strong winds and lightning, the Nepal Electricity Authority (NEA) has stepped up preparations and coordination to maintain regular power supply and restore services in affected areas as quickly as possible. The authority said it is continuously monitoring electricity supply and the condition of transmission and distribution infrastructure across the country while gathering information from affected areas. It has also kept the necessary personnel, equipment and materials ready for an immediate response to potential damage and disruptions. NEA Executive Director Dhirghayu Kumar Shrestha held a virtual meeting via Zoom on Sunday with Distribution and Customer Service Directorate Chief Rajan Dhakal, the head of the Grid Operations Department, heads of provincial offices in all seven provinces and chiefs of two division offices.
Continuous rain disrupts mobile and internet services across Nepal
Heavy rainfall across Nepal since Thursday has disrupted mobile and internet services in several areas, prompting Nepal Telecom to work on restoring affected networks. Severe weather, strong winds and landslides have damaged optical fibre cables and disrupted major power grids, cutting electricity supplies to mobile towers. In remote hilly and mountainous areas, persistent cloud cover sites to repair faults. Nepal Telecom said maintenance work that can be carried out remotely is continuing, while technicians have been deployed since early morning to locations where repairs are possible and snowfall have also prevented solar-powered tower batteries from charging. Landslide-induced road blockages have further hampered technicians from reaching affected sites to repair faults. Nepal Telecom said maintenance work that can be carried out remotely is continuing, while technicians have been deployed since early morning to locations where repairs are possible and conditions are relatively safe.
More Nepalis went abroad for employment in the later five-month period
According to Department of Foreign Employment data, 335,346 Nepalis travelled abroad for employment between April 14 and September 16, 2026, compared with 313,530 during the period from November 17, 2025 to April 13, 2026. The later period recorded 21,816 more departures, representing an increase of around 7 percent. The number of women leaving the country for employment also increased by 8,276, or approximately 23.3 percent. An average of around 67,000 Nepalis went abroad for employment each month during the later period, compared with approximately 62,600 per month in the earlier period.
Integrated law needed to resolve natural resource royalty disputes
The National Natural Resources and Fiscal Commission has called for an integrated law to address potential disputes over the distribution of royalties and other issues related to the use of natural resources. In its eighth annual report recently submitted to President Ram Chandra Paudel, the commission recommended formulating a comprehensive law on natural resource mobilisation and use. According to the report, the law should establish arrangements for investment and benefit-sharing among the three tiers of government, determine the distribution of royalties generated from natural resources, provide mechanisms to resolve potential disputes and address environmental impact assessments related to resource use.
Govt invests over Rs 2.14 billion in startups over three years
The government has provided more than Rs 2.14 billion in loans to startups over the past three years, according to the Industrial Enterprise Development Institute. Between fiscal years 2023/24 and 2025/26, concessional loans worth Rs 2.14 billion were provided to 1,687 entrepreneurs across all seven provinces. The programme aims to promote entrepreneurship, encourage innovation and generate employment. The startup loan programme was launched three years ago to support entrepreneurs with new ideas, knowledge, skills and capabilities in establishing businesses and developing innovative ventures. According to the institute, 922 entrepreneurs received loans worth Rs 1.0579 billion in fiscal year 2025/26 alone.
40 MW Rahughat hydroelectric project connected to national grid
The 40 MW Rahughat Hydroelectric Project in Myagdi district has been connected to Nepal’s national power grid. Developed by Rahuganga Hydropower Limited, a subsidiary of the Nepal Electricity Authority (NEA), the project began generating electricity from its two 20 MW units at Raghuganga Rural Municipality on Wednesday. The electricity is being evacuated to the national grid through the 220 kV Kaligandaki Corridor transmission line. Following the grid connection, trial production will be formally declared in accordance with the power purchase agreement between the project developer and the NEA.
Road near Manakamana Cable Car gate sinks as Trishuli River swells
A section of the road inside the entrance to the Manakamana Cable Car in Ichchhakamana Rural Municipality-4, Chitwan, has sunk following continuous rainfall. The road subsided after the swollen Trishuli River repeatedly struck the suspension bridge connecting Silingtar in Shahid Lakhan Rural Municipality-3, Gorkha, amid heavy rainfall. The river changed course following the rainfall, and its continued force against the suspension bridge caused cracks in the main highway and led to the subsidence of the inner road. Manakamana Cable Car services have been suspended following the road damage. The risk to surrounding areas has also increased as the river continues to hit the bridge with strong force.
Onion prices rise sharply in Janakpurdham
Consumers in Janakpurdham are facing higher onion prices, with onions imported from India selling for as much as Rs 120 per kilogram. The price increase ahead of the festival season has added to the financial burden on households and hotel operators. Hotel operators said they may have to raise food prices if onion prices continue to rise. Consumers have also expressed concern over the sudden increase in the price of the kitchen staple, along with rising prices of other food items. Higher prices of essential commodities during the festival season are expected to increase household expenses. Nepal depends on India for around 98 percent of its onion supply, meaning changes in Indian onion prices have a direct impact on the Nepali market.
Poor visibility grounds Sunday mountain flights
Continuous rainfall and poor visibility grounded all scheduled mountain flights from Tribhuvan International Airport on Sunday morning, according to the airport’s domestic terminal department. Adverse weather also disrupted flights to several domestic destinations, including Bharatpur, Tumlingtar and Pokhara. Flights to Bharatpur and Pokhara resumed after 11 am as visibility improved, while Tumlingtar airport remained closed for the day. State-owned Nepal Airlines also cancelled its scheduled Sunday flights to Rukum and Phaplu due to persistent bad weather.
CNI Koshi urges government to review tax and tariff policies
The Confederation of Nepalese Industries (CNI) Koshi Province has urged the government to review tax, customs, energy and industrial infrastructure policies to improve the competitiveness of domestic manufacturing and agricultural sectors. A delegation led by CNI Koshi President Pawan Kumar Sarda submitted a memorandum to Minister for Industry, Commerce and Supplies Deepak Kumar Sah, calling for a production-friendly tax system. The memorandum raises issues including import duties on consumer goods, tariffs on raw materials, excise duties, value-added tax on electricity, income tax rates and inadequate industrial infrastructure. CNI Koshi also said the open border with India has encouraged cross-border shopping, arguing that high taxes and customs duties have made essential goods such as sugar, food grains, clothing and medicines more expensive in Nepal than in neighbouring Indian markets.
Comment