Beyond the Field: Agricultural Development Bank Diversifies Portfolio to Boost Nepal’s Economy

In a significant move signaling a new direction for one of the country’s most vital financial institutions, the Agricultural Development Bank (ADBL) is actively diversifying its investment portfolio beyond its traditional focus on the agricultural sector.

Agricultural Development Bank

This strategic shift was highlighted by the bank’s Chief Executive Officer (CEO), Govinda Gurung, at a recent industry event.Speaking at the NADA Auto Show 2025, during an interaction program on “Stability in Credit Policy:

A Basis for the Long-Term Development of the Automobile Market,” CEO Gurung clarified that while agriculture remains a top priority for the bank, it is broadening its scope to support other key areas of the economy.

The event, co-organized by the Nepal Forum of Economic Journalists (NAFIJ) and the NADA Automobiles Association of Nepal, provided a platform for crucial discussions on the future of Nepal’s automotive market.

“Although the bank gives priority to the agricultural sector, it is also investing in other areas of the economy,” Gurung stated, underscoring the bank’s commitment to a more balanced and resilient financial strategy.

This diversification is a recognition of the evolving economic landscape in Nepal, where sectors like automobiles, infrastructure, and small and medium enterprises (SMEs) are playing an increasingly important role in driving growth.

The Automobile Sector: A Promising Avenue

A notable area of this diversification is the automobile sector, which Gurung identified as a particularly promising investment. He revealed that the Agricultural Development Bank has been actively providing loans for vehicle purchases and had even set up a stall at last year’s NADA Auto Show to directly engage with customers.

One of the key reasons for the bank’s positive outlook on this sector, according to the CEO, is the low rate of non-performing loans (NPLs). “There are challenges in loans disbursed in other sectors, and bad loans tend to increase there. But in the automobile sector, bad loans are relatively fewer,” he said.

This stability makes auto loans a safer and more attractive proposition for the bank, mitigating risk while still contributing to economic activity.

Gurung also provided insight into the bank’s lending practices for vehicles. He explained that while commercial vehicles can be more challenging to finance, the bank has a more secure approach for private vehicles.

“For private vehicles, we also keep the customer’s property as collateral when issuing loans,” he noted. This dual-collateral approach further reduces the bank’s exposure to risk, ensuring the health of its loan portfolio.

Loan-to-Value and Brand Perception

The CEO also touched upon the intricacies of the Loan-to-Value (LTV) ratio, a crucial metric in the lending process. He explained that the LTV ratio, which determines the maximum amount a bank will lend for a purchase, is not uniform. It varies from country to country and, within Nepal, differs significantly between commercial and private vehicles, reflecting the distinct risk profiles of each.

Furthermore, Gurung highlighted an interesting factor that banks consider when assessing loan applications for a specific vehicle brand: customer perception.

This demonstrates a nuanced understanding of the market, where the brand’s reputation and its value among the public directly influence its financial viability and, consequently, a bank’s willingness to lend.

A Forward-Looking Approach

The Agricultural Development Bank’s decision to actively diversify its loan portfolio is a testament to its forward-looking approach. By strategically investing in stable, high-growth sectors like automobiles while maintaining its core focus on agriculture, the bank is positioning itself for long-term sustainability and growth.

This balanced strategy not only benefits the bank but also contributes to the broader economic development of Nepal by providing crucial financial support to a wider range of industries.

The insights shared by CEO Gurung at the NADA Auto Show 2025 underscore a commitment to innovation and stability, promising a more robust and resilient future for both the bank and the national economy.

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