Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Bank and Financial Institutions Federation Nepal (CIBFIN) has demanded an immediate review of Nepal’s credit policy framework and service charge structure, warning that existing rules are restricting innovation, profitability, and the banking sector’s long-term stability. Speaking at the federation’s sixth General Assembly on Friday, CIBFIN President Upendra Poudyal said Nepal’s banking system must shift toward more flexible, inclusive, and diversified income models to sustain growth in the current economic climate.
Poudyal stressed that banks continue to rely overwhelmingly on net interest income as their primary revenue stream, a model he said is increasingly unsustainable. “It is time to re-evaluate the current credit guidelines,” he said. “We need policies that are flexible, pragmatic, and supportive of service diversification. Nepal’s banks and financial institutions remain committed to serving customers, but the policy environment must evolve.”
He also highlighted the critical role of small and medium enterprises (SMEs) in job creation and economic resilience, urging the government and regulators to prioritize entrepreneurship and innovation. Poudyal argued that Nepal’s banking sector — which contributes significantly to the private sector’s more than 80 percent share of the national economy — is not receiving the recognition or policy support it deserves.
“We are committed to sustainable banking,” he added. “But for that, policy incentives are essential. The private sector plays a dominant role in Nepal’s economy, yet the contribution of banks within that ecosystem often goes unnoticed. Strengthening entrepreneurship and the financial sector requires coordinated national effort.”
Raising concerns over Nepal’s presence on the Financial Action Task Force (FATF) grey list, Poudyal said the situation is becoming increasingly alarming. CIBFIN, he added, is prepared to collaborate with all relevant agencies to ensure Nepal exits the grey list at the earliest.
Despite persistent economic challenges, Poudyal criticized the lack of urgency from the authorities. “Problems in the economy are visible, but no concrete steps are being taken to solve them,” he warned. “We must confront these challenges through our own capacity, building mutual trust and coordination among all stakeholders. Nepal has the potential to develop as an investment hub — but only if policy reforms move ahead without delay.”
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