Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal Rastra Bank (NRB) Governor Dr. Bishwanath Paudel has expressed concern over underlying structural challenges in Nepal’s economy, even as he highlighted the current period as a “best of times” in terms of investment potential due to abundant liquidity in the banking sector.
Speaking at a program held in Kathmandu, Governor Poudel said that while ample investible funds are available, the economy still faces notable risks, particularly in the agriculture sector and among small and medium enterprises (SMEs).
“There are clear signs of rising non-performing loans (NPLs) in the agriculture and SME sectors,” Poudel stated. “If left unaddressed, these issues could pose risks to financial stability in the near future.”
He emphasized the urgency of targeted intervention to address these growing challenges, stating, “We must take immediate steps to resolve the emerging stress in agriculture and SME lending.”
As Nepal prepares to unveil its next monetary policy, Governor Poudel stressed the need for strong coordination between fiscal and monetary policies to ensure economic stability and sustained growth.
Despite the concerns, Poudel noted that the banking sector currently reflects positive macro-financial indicators, including:
Strong liquidity
Availability of investment capital
Stable interest rates
Reduced credit pressure
“These conditions present a unique opportunity to accelerate economic growth,” he said, calling on the government to introduce strategic reform programs that align with the monetary landscape.
The governor’s remarks come at a time when private sector confidence remains subdued, with lending sluggish in priority sectors. Analysts have also pointed to the mismatch between liquidity availability and credit absorption capacity as a core issue needing policy-level solutions.
As the NRB drafts its upcoming monetary policy for the next fiscal year, the central bank is expected to focus on credit quality, sectoral lending discipline, and policy synergy with the Ministry of Finance.
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