Banks in Nepal face rising non‑banking assets as loan recoveries stall

Banks in Nepal are struggling to recover loans as borrowers delay repayments and pledged collateral, such as land and buildings, remains unsold. The difficulty has led to assaults on bank staff attempting recovery and has forced banks to retain the unsold collateral as non‑banking assets, reducing profitability and liquidity.

Data from Nepal Rastra Bank shows that the combined non‑banking assets of the country's 20 commercial banks rose to Rs 46.80 billion in fiscal year 2025/26, an 18.89 % increase from the previous year’s Rs 38.79 billion. Himalayan Bank holds the largest share at Rs 6.24 billion, followed by Global IME Bank (Rs 5.89 billion), Nepal Investment Mega Bank (Rs 4.70 billion) and NIC Asia Bank (Rs 4 billion). Bankers warn that the growing stock of non‑productive assets could weaken lending capacity unless economic activity and the property market improve.