‘NRB studying blacklisting provisions hindering investment’

KATHMANDU. Nepal Rastra Bank (NRB) Governor Prof. Dr. Bishwo Nath Paudel has said the central bank is closely studying blacklisting provisions that have become one of the major structural barriers to investment growth in Nepal. He warned that the forced sale of another person’s collateral for personal gain constitutes a “part of corruption” and will not be tolerated by the central bank.

Speaking at the program organized by Nepalese Association of Financial Journalists (NAFIJ) on Sunday, Governor Paudel said NRB will take strict action if such practices are found, particularly within private banks and financial institutions.

“If anyone attempts to profit by forcibly selling someone else’s collateral, that is part of corruption, and Nepal Rastra Bank will not treat it as excusable,” Paudel said. “In state-owned banks, the government bears the risk in certain cases, but if such incidents occur in private banks, we will take them very seriously.”

The governor said NRB has already introduced several policy adjustments to stimulate economic activity and improve the operating environment for banks and financial institutions. As part of the first-quarter review of monetary policy, the central bank has eased provisions to support profitability and opened the way for the closure or consolidation of excess bank branches in metropolitan areas.

“Our objective is to ensure banks generate healthy profits, expand lending, and focus on digital transactions so that they can contribute to overall economic momentum,” Paudel said. He added that NRB is working to strike a balance by designing clear policies that distinguish between legitimate banking practices and wrongdoing, based on feedback from stakeholders.

Paudel noted that a significant amount of liquidity remains idle within the banking system, and NRB is prioritizing measures to channel these funds into productive investment. He emphasized that broader economic movement is heavily influenced by mass psychology, not just policy instruments.

“Over the past decade, Nepal has seen substantial progress in sectors ranging from information technology to roads and physical infrastructure,” he said. “Despite this, confidence remains weak.”

Citing Sri Lanka’s recovery after a severe economic crisis, Governor Paudel expressed confidence that Nepal can also regain momentum if focus is placed on practical reforms and positive outcomes. He said boosting morale is currently more critical than introducing additional policies.

“Policy fundamentals are strong, but public confidence is fragile,” he said. “We must highlight success stories, such as export-performing commodities like large cardamom, and reinforce areas where Nepal is doing well.”

The NRB governor also criticized the long-standing mindset among both the general public and senior officials that “nothing happens in Nepal,” which has driven large-scale outward migration of the younger generation.

“For more than a decade, people have been sending their children abroad believing this country has no future,” Paudel said. “We must bring that talent back—but not to turn them into ministers or push them into political races.”

On the issue of blacklisting, Paudel acknowledged that the current system has placed a large number of borrowers on the blacklist, particularly affecting the construction sector. He said the practice has begun to resemble a microfinance-style blanket approach, where the failure of one party leads to broad punitive action against multiple entities.

“If one contractor fails, everyone associated is often blacklisted,” he said. “This has weakened investor confidence. That is why Nepal Rastra Bank is reviewing the blacklisting framework as part of wider financial-sector reforms.”

Governor Paudel concluded by noting that there is no quick-fix formula for economic revival and that gradual, consistent efforts are necessary. Failure, he added, should be recognized as a normal part of business rather than stigmatized, provided there is transparency and accountability.