Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The average non-performing loans (NPLs) of Nepal’s commercial banks rose by 13.26 percent in the H1 of the current fiscal year 2082/83 (ending mid-January 2026), even as eight banks successfully reduced their bad loans.
According to a senior official of Rastriya Banijya Bank (RBB), citing the report of international auditing firm Howlader Yunus & Company of Bangladesh, “Our bank’s performance is better compared to others. As of mid-January, our NPLs remain around 4.5 percent. The report indicates a maximum range of 5.5–6 percent.”
The audit by Howlader Yunus & Company was conducted under the International Monetary Fund (IMF) program, covering the 10 largest commercial banks in Nepal, including RBB. As of the second quarter of FY 2082/83, RBB’s NPLs stood at 4.36 percent, a decrease of 12.09 percent from 4.96 percent in the same period last year.
The bank attributed the challenges in loan recovery to sluggish economic activity and both direct and indirect impacts of the recent general strike (Janajati-Jenaji movement), while expressing confidence that collections will gradually improve.
Sector-wide increase in bad loans
The public financial statements show that the average NPL of commercial banks reached 5.07 percent as of mid-January 2082/83, up from 4.48 percent in the same period last year. This reflects an overall 13.26 percent increase in the banking system’s bad loans, driven by weak private sector investment, lower consumption, and continued disruption in the construction and real estate sectors.
Banks with highest NPL surge
NIC Asia Bank reported the largest increase, with NPLs jumping 62.03 percent to 7.47 percent from 4.61 percent last year. Himalayan Bank’s bad loans rose 59.83 percent to 7.96 percent from 4.98 percent, while Prabhu Bank’s NPLs increased 56.91 percent to 7.94 percent. Citizens Bank’s NPLs surged 41.44 percent to 6.86 percent.
Other banks also saw notable increases:
Nepal Investment Mega Bank: +34.81% to 7.90%, Prime Bank: +28.62% to 6.38%, NMB Bank: +15.15% to 4.56%, Sanima Bank: +12.73% to 3.63%, Standard Chartered Bank: +9.94% to 1.88%, Nepal Bank Limited: +7.01% to 5.34%, Everest Bank: +3.03% to 0.68%, Global IME Bank: +1.02% to 4.91%.
Bad Loans Comparison (Percentage Points)
Banks showing improvement
Despite the overall rise, eight banks managed to reduce NPLs during the period. Rastriya SBI Bank led the improvements, cutting NPLs by 25.63 percent to 2.64 percent from 3.55 percent last year.
Siddhartha Bank reduced its bad loans by 23.33 percent to 3.45 percent, Nabil Bank by 13.79 percent to 4.25 percent, Agricultural Development Bank by 5.10 percent to 4.65 percent, and Machhapuchhre Bank by 4.49 percent to 4.25 percent.
Other improving banks include Laxmi Sunrise Bank (-2.99% to 5.50%) and Kumari Bank (-0.57% to 6.92%).
Bankers note that while some banks have successfully managed their bad loans, weak economic growth, slow investment, and sectoral stagnation continue to exert pressure on loan recovery across the banking system.
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