NRB Extends Timeline for BFIs to Meet Sectoral Lending Requirements
Nepal Rastra Bank (NRB) has extended the deadline for banks and financial institutions (BFIs) to meet the mandatory lending requirements to primary sectors, offering increased flexibility in expanding credit flow to priority areas such as agriculture, energy, and small enterprises.
By amending the Unified Directives for Banks and Financial Institutions 2024, the central bank has granted BFIs an additional year to fulfill the minimum sectoral credit obligations. As per the revised timeline, commercial banks are now required to allocate a minimum of 15 percent of their total loans to the agriculture sector and small and medium enterprises (SMEs) by mid-June 2028, instead of the previously set deadline of mid-June 2027.
To ensure a gradual increase, the NRB has set intermediate targets: commercial banks must direct at least 11 percent of their credit to the specified sectors by mid-June 2025, 12 percent by FY 2025/26, 13 percent by FY 2026/27, and finally reach 15 percent by FY 2027/28.
The revised guidelines also extend similar deadlines for development banks and finance companies. Development banks are now required to channel at least 20 percent of their credit to primary sectors, while finance companies must allocate a minimum of 15 percent by FY 2027/28. These sectors include agriculture, household enterprises, micro and small businesses, energy, and tourism.
The NRB has introduced further flexibility for commercial banks that have already met the minimum agricultural lending requirement. These institutions are permitted to redirect the allocated funds to other priority sectors within their areas of expertise. Such allocations will still count toward the primary sector lending requirement.
Additionally, the central bank has authorized the restructuring and rescheduling of sectoral loans up to Rs 20 million. BFIs are allowed to revise loan terms for borrowers in the agriculture, energy, and micro, household, and SME sectors facing difficulties due to adverse conditions. These borrowers must pay at least 10 percent of the accrued interest, and the restructuring must be requested by the borrower. This facility can be used once only, and the process must be completed by mid-October 2025.
The restructured loans must retain their original classification as of mid-January 2024, and BFIs are barred from writing back any loan loss provisions associated with these loans prior to implementation of the revised terms.
