Banking News — Nepal Rastra Bank has introduced a new digital lending framework allowing micro, small, and medium-sized enterprises (MSMEs) to obtain unsecured loans of up to Rs. 1 million through mobile and other digital platforms based on their business transactions.

The central bank recently amended its Digital Lending Guidelines, expanding eligibility beyond salaried individuals and customers with professional income accounts to include MSMEs. The move is aimed at improving financial access for small businesses by enabling banks and financial institutions to assess loan applications using digital transaction data rather than traditional collateral.

Under the previous policy, customers with salary or professional income accounts were eligible for digital loans of up to Rs. 500,000, while other customers could borrow up to Rs. 200,000. The revised framework significantly raises the ceiling for qualified businesses to Rs. 1 million.

Several financial institutions have already begun issuing loans under the new policy. According to the central bank, banks have collectively disbursed more than Rs. 16 billion in digital loans to date, and the revised guidelines are expected to further accelerate digital financing for the MSME sector.

How the Digital Loan Process Works

To qualify for the facility, businesses must maintain digital records of their operations through business management software or digital accounting systems. These platforms record sales, billing, inventory, banking transactions, and other operational data, enabling lenders to evaluate the financial performance of a business using real-time digital information.

Software providers analyze business data against the lending criteria of partner banks and identify businesses that meet eligibility requirements. Once an eligible business expresses interest, its transaction data is shared with the selected bank after obtaining the business owner’s consent. The bank then reviews the information and, if approved, processes and disburses the loan digitally.

Industry Sees Major Opportunity for Small Businesses

Santosh Tamrakar, Managing Director of IMS Software, said the new policy will significantly improve financing opportunities for small entrepreneurs. He noted that the company’s digital lending platform is already operational with Kumari Bank, through which several loans have already been issued.

Tamrakar said his company has been developing the digital lending platform for nearly two years but implementation was delayed until the central bank introduced the necessary regulatory framework.

“We manage billing systems for businesses and can identify enterprises that meet banks’ lending criteria. Once a business agrees, its data is shared securely with the partner bank for loan processing,” he said.

Industry experts believe the policy will particularly benefit businesses that regularly use digital payment systems. They say a transaction-based lending model could significantly expand financial inclusion for MSMEs while encouraging greater adoption of digital payments and formal banking services.

Experts also note that because banks can assess borrowers using verified business transaction data including billing, sales, inventory, and cash flow the new system is expected to improve transparency, strengthen risk assessment, and reduce default risks compared with conventional unsecured lending.