KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic environment is experiencing stress across multiple fronts, as reflected in the recent 33-point drop in the NEPSE index, driven by fiscal year-end caution and broader concerns about financial sector health.
The sharp fall in stock turnover and market capitalization indicates waning investor confidence, which is compounded by rising non-performing loans (NPLs) in the banking sector—now at Rs 2.9 trillion—amid political interference in loan recovery processes.
These financial headwinds coincide with a period of intense pressure on banking personnel managing loan recoveries, while the government grapples with tax evasion, delays in infrastructure restoration, and mounting public dissatisfaction.
Although there are efforts to attract foreign investment and modernize sectors like digital infrastructure and education, structural inefficiencies, weak regulatory enforcement, and governance inertia continue to undermine economic stability and growth potential.
NEPSE drops 33 points amid fiscal year-end investor caution
The Nepal Stock Exchange fell by 33.17 points last week, closing at 2,595.74, as investors showed caution ahead of the fiscal year’s end. The market saw volatility throughout the week, with tourism stocks falling the most. Dordi Khola Jal Bidyut dropped 15.5%, while Panchakanya Mai Hydropower gained over 17%. Turnover fell by 33% to Rs 35.09 billion, and market capitalization shrank by Rs 55 billion.
PM Oli briefs parliament on Spain visit for UN development conference
Prime Minister KP Sharma Oli has updated the federal parliament on his official trip to Spain, which begins today. Leading a delegation of 21 members, he is attending the Fourth UN International Conference on Financing for Development (FfD 4) in Seville from June 30 to July 3. As Chair of the Least Developed Countries Coordination Bureau, he was invited by UN Secretary General António Guterres and Spanish PM Pedro Sánchez and will speak at the conference. Oli is also scheduled to meet with global leaders, promote Nepal–Spain business cooperation, and hold meetings with Spain’s king and Real Madrid representatives. His return is planned via Doha on July 4.
Rising non performing loans and local government hurdles challenge Nepal’s banking sector
Nepali banks are under pressure as non performing loans (NPLs) surge to Rs 2.9 trillion—up from Rs 1.94 trillion last year—pushing the NPL ratio to 5.24%. In response to increasing bad debt, the central bank raised the acceptable NPL threshold from 5% to 8% in March. However, banks face difficulties recovering loans due to local governments delaying or refusing the mandatory approval for collateral auctions. Political influence and pressure are causing legal setbacks, threatening the financial health of banking institutions and undermining economic stability.
Over Rs 10 billion in tax evasion and FOREX misuse cases filed in 10 months: Revenue Investigation Department
In the last 10 months, Nepal’s Department of Revenue Investigation (DRI) has filed cases worth over Rs 10 billion in tax evasion and foreign exchange misuse at High Courts and district courts, implicating 321 individuals with prison terms of up to five years. The cases include smuggling e cigarettes, gold, alcohol, and clothing. The largest tax evasion case—Rs 1.37 billion—involves Nepal Can Move Pvt. Ltd. Meanwhile, 161 individuals are facing charges in FOREX misuse cases, including a record seizure of Rs 250 million in Euros and USD. DRI Director General Chandi Ghimire warns that online-based financial crimes are presenting mounting challenges.
Consumer court orders over Rs 259 million compensation from three major hospitals for medical negligence
Nepal’s Consumer Court has directed three large hospitals—Grandi City Hospital, Om Hospital, and Himal Hospital—and the involved doctors to compensate a total of Rs 259 million in three separate medical negligence cases within a month. Om Hospital must pay Rs 5.7 million following the death of an elderly patient due to misdiagnosis. Himal Hospital and a pediatrician were fined Rs 145 million after a toddler died from negligent care. In a third case, Grandi Hospital and a surgeon have been ordered to pay Rs 5.7 million for surgical negligence. Aggrieved parties may appeal to the High Court if dissatisfied.
Nine months after BP highway collapse, government inaction hurts lives and economy
Despite floods wiping out a 12 km stretch of the crucial BP Highway at Roshi nine months ago, the government has yet to restore full connectivity. Thousands remain stranded and local businesses are suffering. Built with Japanese aid to link the eastern Tarai and mid-hill regions, the highway remains unrepaired, with only a precarious rainy season diversion in place. Without an allocated budget for reconstruction, appeals from lawmakers and impacted communities have gone unanswered. The delay exposes government inaction and further threatens regional trade and travel as the monsoon continues.
Government forms long overdue cooperative loan recovery tribunal amid rising sector crisis
After an eight-year delay under the Cooperative Act 2074, the Government of Nepal has established the Cooperative Loan Recovery Tribunal to tackle increasing financial disputes in the cooperative sector. The Cabinet approved the formation on Friday. Chaired by Kritibahadur Basnet, with members Basant Parajuli and Govinda Sharma Gaire, the tribunal is expected to streamline debt recovery. The move responds to growing loan defaults and legal bottlenecks within cooperatives and was proposed by the Ministry of Land Management, Cooperatives, and Poverty Alleviation.
Over 4,800 police officers quit in five years amid growing foreign migration trend
Nepal’s growing trend of seeking opportunities abroad is now affecting civil service jobs, with a significant number of police officers resigning. In the last five fiscal years, 4,842 Nepal Police personnel voluntarily resigned—outnumbering those who retired. The primary drivers are low pay, limited career progression, and better prospects overseas—especially among lower ranked officers such as constables and corporals. Even after extensive training, many depart before qualifying for pensions. In fiscal year 2081/82 alone, a record 2,216 officers submitted resignations. Police leaders warn that without urgent reforms in pay and benefits, the trend will worsen.
House of Representatives passes Finance Bill 2082 with focus on tax stability and investment promotion
Nepal’s House of Representatives approved the Finance Bill 2082 on Saturday, following its introduction by Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel. The legislation aims to ensure stable tax policies, expand the tax base, curb revenue leakage, and bring informal economic activities into the formal sector. Paudel emphasised during debates that frequent tax changes deter investment and harm businesses. The bill proposes targeted tax incentives to boost production and investment, maintains consistent tax policy, adjusts duties on harmful goods like alcohol and tobacco, and removes the advance income tax provision.
End of fiscal year brings stress and long hours for bankers amidst busy loan recovery season
As Nepal’s planting season begins in the fields, bankers are entering a period of heightened stress due to end of fiscal year loan recoveries. Branch managers, loan officers, and accountants are working overtime to handle loan collections, provisioning, classification, and reporting. Many borrowers delay payments, avoid contact, or disappear, complicating recovery efforts. A viral TikTok video by a banker highlights the daily pressures and frustrations. Staff in microfinance and cooperatives face similar strains. The month of Ashad demands long hours, sacrifices in personal life, and relentless recovery efforts, taking a toll on mental health and family life.
Government moves to privatize four state owned industries
The Government of Nepal has taken the first steps to privatise four long-dormant state-owned enterprises by launching due diligence audits. The Ministry of Finance has solicited proposals to select consultants who will assess the financial, technical, legal, and physical aspects of Nepal Metal Company, Nepal Orient Magnesite, Butwal Spinning Mills, and Janakpur Cigarette Factory. The audits will include asset valuation, liability review, and brand evaluation. The consultant, to be chosen via competitive tender, is required to submit a final report within 56 days—signalling the government’s commitment to reviving these industries through private-sector participation.
Surge in property insurance signals shift in Nepal’s non life insurance market
Property insurance is gaining ground in Nepal’s non life insurance market, which has traditionally been dominated by motor coverage. In the first 11 months of fiscal year 2080/81, insurers collected Rs 10.13 billion in property insurance premiums—24.4% of the total non life insurance business—marking a 10.81% increase year on year. Motor insurance remains the largest category, with Rs 11.74 billion (29.44%). The rise in property insurance is largely due to increased claims from floods, landslides, and civil unrest, and insurers have already paid out over Rs 3.44 billion on property claims. With 1,787 claims filed, growing awareness of natural disaster risks is driving demand for property coverage.
Gandaki Province approves Rs 3.19 billion budget for 2025/26 with development focus
Gandaki Province has passed a Rs 3.19 billion budget for fiscal year 2025/26, with a strong emphasis on development and infrastructure. Chief Minister Surendra Raj Pandey and other ministers responded to detailed discussions before securing majority support in the Provincial Assembly. Major allocations are directed toward Kaski and Gorkha due to ongoing liabilities. Although the province generally discourages infrastructure projects under Rs 5 million, some smaller initiatives were funded due to prior commitments. Pandey emphasized aligning financing with project planning to ensure responsible spending.
Nepal promotes investment at SPIEF 2025, engages key Russian stakeholders
Nepal marked a significant diplomatic moment at the 2025 St. Petersburg International Economic Forum. Led by Investment Board CEO Sushil Gyewali, Nepal’s delegation met with major Russian firms—including Russian Railways, RusHydro, and Sberbank—highlighting opportunities in hydropower, infrastructure, and resource development. With 24,200 global delegates attending, Nepal showcased its improved investment climate. Russia has invited an even larger Nepali delegation for SPIEF 2026, signaling growing bilateral economic ties.
Nepal sees spike in data center and cloud registrations amid digital growth
Following the introduction of the “Data Center and Cloud Service Directive 2081,” the number of registered data service providers in Nepal has risen sharply. Firms like Ncell, Silver Lining, and AccessWorld have already registered, with more in process. The directive requires existing data centers to register within six months and comply with standards such as tier classification and annual audits. Officials say the move supports secure and regulated digital infrastructure during Nepal’s ongoing tech expansion.
Lawmakers demand urgent monsoon response, coordination, and justice
In parliament, lawmakers called for immediate rescue and compensation measures amid monsoon disasters. Arjun Narsing KC mentioned a flood-related death in Nuwakot, while others urged coordinated response for agricultural and livestock losses. Ramhari Khatiwada criticized poorly planned infrastructure for exacerbating landslides. Madhav Sapkota demanded justice for a child rape and murder in Sindhupalchowk. Other MPs raised concerns about misuse of security forces, education issues, and mysterious deaths.
Barun Hydropower to issue 100% right shares worth Rs 53.58 crore
Barun Hydropower will issue 100% right shares from Ashad 31 to Shrawan 19, 2082, offering 53.58 lakh units in a 1:1 ratio. The offering will double the company’s paid-up capital to Rs 1.07 arba. RBB Merchant Banking is managing the issuance. Only shareholders on record before Jestha 22 are eligible.
Diploma in labour studies and national migration policy underway
Labour Minister Sarat Singh Bhandari announced plans to launch a Diploma in Labour Studies in partnership with Kathmandu University. The initiative, unveiled during an MoU signing with Helvetas Nepal and other institutions, aims to build a skilled, digitally trained workforce. Bhandari also said Nepal’s first National Migration Policy is nearing completion. The initiative is supported by Switzerland and focuses on closing training gaps and strengthening employment services.
People’s Power announces 50% right share issue worth Rs 31.63 crore
People’s Power Limited plans to issue 31.63 lakh right shares in a 1:0.5 ratio between Ashad 22 and Shrawan 11, 2082. This will raise the paid-up capital from Rs 63.26 crore to Rs 94.89 crore. Prabhu Capital is the issue manager. Shareholders listed before Ashad 2 are eligible to apply.
Siddhartha Hospitality launches luxury retreat in Chitwan’s Meghauli
Siddhartha Hospitality has opened a new luxury resort—Siddhartha Wildlife Retreat—in Meghauli, Chitwan. The rebranded former Sarang Wildlife Sanctuary spans 12 bighas and includes 17 Tharu-style villas. It offers deluxe amenities, birdwatching, and elephant experiences. The retreat targets high-end eco-tourists and supports Nepal’s growing wildlife tourism market. The group now operates more than 30 properties nationwide.
Bankariya community sees progress but land rights remain unresolved
In Makawanpur’s Manahari Rural Municipality, the endangered Bankariya indigenous group is seeing better living conditions, thanks to social benefits, education, and local enterprise. However, the community still lacks permanent land rights due to expired temporary land documents from 2005, affecting their ability to register businesses and secure property. The 93-member group is advocating for legal recognition of their settlement.
Myagdi farmer pioneers commercial hornet farming for income and conservation
Ashok Shahi from Beni Municipality-6 in Myagdi has successfully commercialized hornet farming. Starting with 11 wild nests, his farm now produces larvae used in local cuisine, selling at Rs 3,500 per kg. His goal is to expand production from 30 kg last year to 100 kg this year. The initiative provides a unique income stream and supports conservation.
IPPAN welcomes removal of ‘take and pay’ clause, sees boost for hydropower investment
The Independent Power Producers’ Association Nepal (IPPAN) praised the government’s decision to eliminate the ‘take and pay’ clause from the new budget, calling it a positive step for the energy sector. IPPAN President Ganesh Karki said the change will unlock pending power purchase agreements and improve investor confidence. The clause had tied payments to actual electricity consumption, raising financial risks for producers. IPPAN now urges swift finalization of new PPAs.
Flights grounded at Taplejung airport due to persistent monsoon fog
Taplejung’s Suketar Airport has been closed since June 13 due to dense fog and poor visibility caused by the monsoon. Nepal Airlines suspended its Kathmandu–Taplejung route, leaving passengers stranded and bookings down. The service had only recently resumed after a four-month gap. Locals are turning to long road journeys as unpredictable weather continues to disrupt air service.
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