Bankers Hope for Lending Growth as New Government Forms Despite Liquidity Surplus

Bankers have expressed optimism that lending activity will pick up following the formation of a new government, even as Nepal’s banking sector continues to face excess liquidity due to an ongoing economic slowdown.

According to data from the Nepal Bankers’ Association (NBA), loan disbursement slowed further last month, largely impacted by the general election held on March 5. Commercial banks issued only Rs 15.73 billion in new loans between mid-February and mid-March, raising total lending marginally to Rs 5.172 trillion from Rs 5.157 trillion.

NBA President Santosh Koirala stated that investors have been adopting a “wait-and-watch” approach, holding back on fresh borrowing and business expansion decisions. Bankers, however, remain hopeful that improved political stability will boost investor confidence and revive credit demand in the coming months.