Kathmandu – Nepal Rastra Bank (NRB) has reported a 2.5% increase in credit flow from banks and financial institutions to the private sector. According to the central bank’s report on the current economic and financial status, credit disbursed to the private sector grew by NPR 128.47 billion as of mid-November 2024. This marks an increase compared to the NPR 99.40 billion (2.1%) growth recorded in the same period last year. On an annual point-to-point basis, private sector credit flow rose by 6.2% in the current fiscal year.

Sectoral Distribution of Credit
As of mid-November, 64.1% of the total private sector credit went to non-financial institutional sectors, while 35.9% was disbursed to individuals and households. This represents a slight shift from the previous year when the distribution stood at 63.1% and 36.9%, respectively.

By institution type, credit flow from commercial banks increased by 2.6%, from development banks by 2.0%, and from finance companies by 3.9%.

Credit Secured by Collateral
Of the total credit disbursed, 13.5% was secured by current assets (agricultural and non-agricultural goods), while 66.0% was backed by real estate mortgages. These figures reflect minor adjustments from the previous year, where the proportions were 12.1% and 67.3%, respectively.

Sector-wise Growth in Credit
In the first four months of the fiscal year 2081/82 (2024/25):

• Industrial production credit increased by 3.1%
• Construction sector credit grew by 1.8%
• Wholesale and retail trade credit rose by 2.1%
• Transportation, communication, and public services credit surged by 4.6%
• Service industry credit expanded by 2.9%
• Consumer credit increased by 2.5%
• Credit to the agriculture sector, however, declined by 0.9%.

Loan Types and Growth Trends
During the same period, the following types of credit showed varying growth rates:

• Term loans: Up by 2.7%
• Margin loans: Increased by 19.6%
• Trust receipt loans (import financing): Up by 22.1%
• Hire purchase loans: Increased by 2.1%
• Cash credit: Grew by 0.6%
• Real estate loans (including residential housing): Rose by 1.7%
  Conversely, overdraft loans declined by 6.6%, reflecting a decrease in short-term credit usage.

The NRB’s data highlights the dynamic nature of credit flow, influenced by sectoral demands and evolving economic conditions.