Nepal microfinance nonperforming loans reach Rs 51 billion

Nonperforming loans (NPLs) at microfinance institutions in Nepal have surged to nearly Rs 51 billion, according to a report by Nepal Rastra Bank. This represents a 63.83 percent increase over the previous year, a growth rate that has more than doubled compared to the prior period and has outpaced total lending growth.

During the review period ending July 15, 2026, microfinance institutions extended Rs 487.73 billion in loans, a 10.09 percent increase. Consequently, total loan loss provisions rose by 34.88 percent to Rs 35.24 billion. The central bank attributed the rise in NPLs to social obstacles in loan recovery, borrowers securing multiple loans, a sluggish economy, and diminished repayment capacity.

Parallel to the rise in bad loans, the country is facing a significant increase in banking offenses. Data from the Police Headquarters indicates that 12,950 banking offense cases were registered in the fiscal year 2082/83. These crimes include fraudulent documentation for loans and issues with dishonored checks, raising concerns regarding financial governance and the stability of the banking system.