Private Sector Credit Grows by Rs 407 Billion; Real Estate Remains Key Loan Collateral

Lending to the private sector from banks and financial institutions (BFIs) has gone up by Rs 407.62 billion, showing an 8.7% increase compared to the same period last year, according to the latest data from Nepal Rastra Bank (NRB). Credit issued by BFIs had amounted to Rs 246.80 billion during the corresponding period a year ago.

Of the total private sector credit, 63% was channeled toward non-financial institutional borrowers, while 37% went to individuals and households. These proportions have remained largely unchanged from last year.

Commercial banks recorded the highest growth in private sector lending at 8.4%, followed by finance companies at 6.9% and development banks at 4.7%.

In terms of loan security, real estate continues to be the most preferred form of collateral, backing 65% of the total loans. This is a slight decline from last year’s 68.5%. On the other hand, loans secured by current assets — including agricultural and non-agricultural goods — rose to 14.5%, compared to 12% the year before.

Reviewing the credit distribution across various sectors, the transport, communication, and public service sectors saw the sharpest rise in credit flow at 13.5%. The construction sector followed with 12.9% growth, while lending to the service industry rose by 8.8%. Credit to industrial production increased by 8.2%, consumer lending by 10.9%, and the wholesale and retail trade sector saw a moderate rise of 5.2%.