Banks’ Non-Banking assets surge to Rs 51.12 bn, Raising fresh concerns over credit risk and asset quality

KATHMANDU: Nepal’s banking sector is facing rising stress as non-banking assets (NBA) held by banks and financial institutions (BFIs) have climbed to Rs 51.12 billion as of mid-October (Ashoj end) of the current fiscal year 2082/83, according to fresh data published by Nepal Rastra Bank (NRB). The swelling stock of assets taken over from borrowers due to loan defaults reflects deepening vulnerabilities in real-estate backed lending, delayed recoveries, and lingering credit market pressures.

The figure includes Rs 43.24 billion held by commercial banks, Rs 4.84 billion by development banks, and Rs 3.03 billion by finance companies.

Sector experts say the rising NBA poses growing challenges to liquidity management, profitability, and capital adequacy—core indicators closely watched by international investors, credit rating bodies, and Nepal’s economic policymakers.

Commercial Banks:

Global IME Tops the List With Rs 6.05 Billion

Commercial banks continue to carry the overwhelming burden of non-banking assets. NRB data shows:

Global IME Bank leads with the highest NBA at Rs 6.05 billion, reflecting aggressive lending in past years and slow asset disposal in the current market environment.

Himalayan Bank follows with Rs 5.93 billion,

NIC Asia Bank with Rs 4.46 billion,

Prime Bank with Rs 4.25 billion,

Nepal Investment Mega Bank (NIMB) with Rs 3.87 billion,

Nabil Bank with Rs 3.45 billion,

Kumari Bank with Rs 2.52 billion,

Laxmi Sunrise Bank with Rs 2.19 billion.

Other commercial banks recording significant NBA include:

NMB Bank – Rs 1.77 billion

Prabhu Bank – Rs 1.68 billion

Agricultural Development Bank – Rs 1.34 billion

Citizens Bank – Rs 1.26 billion

Sanima Bank – Rs 1.03 billion

Nepal SBI Bank – Rs 95 crore

Siddhartha Bank – Rs 77.20 crore

Machhapuchhre Bank – Rs 60 crore

Everest Bank – Rs 53.85 crore

Nepal Bank – Rs 26.42 crore

Rastriya Banijya Bank – Rs 25 crore

Bankers say high NBA indicates that borrowers—particularly in real estate, SMEs, and trading—are struggling to generate enough cash flows to service loans, leading to asset seizures under the Debt Recovery Act.

Development Banks: Jyoti Records the Highest NBA at Rs 1.07 Billion

Development banks collectively hold Rs 4.84 billion in NBA, with:

Jyoti Bikas Bank topping the list at Rs 1.07 billion, far outpacing its competitors.

Other NBAs in the development banking category include:

Garima Development Bank – Rs 68.22 crore

Mahalaxmi Bikas Bank – Rs 58.27 crore

Sangrila Development Bank – Rs 52.81 crore

Muktinath Bikas Bank – Rs 41.31 crore

Kamana Sewa Bikas Bank – Rs 34.04 crore

Lumbini Bikas Bank – Rs 26.54 crore

Excel Development Bank – Rs 26.35 crore

Saptakoshi Development Bank – Rs 24.95 crore

Smaller development banks also hold NBAs in varying amounts, including:

Shine Resunga – Rs 15.19 crore

Corporate Bikas Bank – Rs 11 crore

Sindhu Bikas Bank – Rs 6.28 crore

Karnali Bikas Bank – Rs 6.11 crore

Narayani Development Bank – Rs 3.61 crore

Miteri Bikas Bank – Rs 83 lakh

Green Development Bank – Rs 51 lakh

Salapa Development Bank – Rs 45 lakh

The trend highlights that development banks, which primarily serve SMEs and rural markets, are beginning to face more pronounced repayment distress.

Finance Companies: Goodwill Finance Leads With Rs 52.29 Crore

Finance companies hold more than Rs 3.03 billion in non-banking assets. Among them:

Goodwill Finance tops with Rs 52.29 crore in NBA.

Gorkhas Finance follows with Rs 48 crore,

Pokhara Finance with Rs 41.44 crore,

Progressive Finance with Rs 25.11 crore,

Best Finance with Rs 22 crore,

Reliance Finance with Rs 21 crore,

Nepal Finance with Rs 17.90 crore,

Samriddhi Finance with Rs 17.33 crore.

Additional finance companies’ NBA holdings include:

Guheshwori Merchant Finance – Rs 15.87 crore

Janaki Finance – Rs 13.12 crore

Manjushree Finance – Rs 10 crore

Central Finance – Rs 8.32 crore

ICFC Finance – Rs 5 crore

Multipurpose Finance – Rs 2.53 crore

Capital Merchant Finance – Rs 2 crore

Shree Investment Finance – Rs 1.53 crore

Finance companies, with smaller portfolios and thinner capital buffers, remain especially vulnerable when loan recoveries lag behind regulatory expectations.

Growing NBA Raises Red Flags for Investors and Regulators

The rising total of Rs 51.12 billion signals systemic risks:

Asset Disposal Challenges: Banks face difficulties selling seized properties due to weak demand and sluggish real-estate transactions.

Capital Strain Possibility: Higher NBA increases provisioning pressure, reducing profitability.

Macroeconomic Stress Indicators: Rising NBAs often reflect economic slowdown, liquidity tightness, consumption decline, and weaker borrower resilience.

FDI Confidence and Banking Stability: International investors closely monitor these indicators when evaluating investment climates—particularly in banking, telecom, hydropower, and infrastructure sectors.

Impact on Credit Expansion: Rising NBA restricts banks’ ability to expand fresh lending, affecting private-sector investment and overall economic momentum.

Economists say if the trend continues, BFIs will need to accelerate collateral auctions, improve credit risk assessment, and strengthen due-diligence practices, especially in high-risk sectors.