Nepal Mandatory Sector Lending Policy Expands to Tourism and IT

18th March 2026, Kathmandu

The Nepal Mandatory Sector Lending Policy has undergone a strategic expansion following the mid-term review of the Monetary Policy for FY 2025/26 (2082/83 BS).

Nepal Mandatory Sector Lending

In a move to modernize the economy and address excess liquidity, Nepal Rastra Bank (NRB) has officially integrated the Tourism and Information Technology (IT) sectors into the mandatory lending framework. This directive requires banks and financial institutions (BFIs) to pivot their credit portfolios toward these high-growth areas by the end of Poush 2083.

Strategic Shift in Priority Lending

For years, Nepal’s mandatory lending was heavily concentrated in agriculture and energy. The new policy recognizes that Nepal’s comparative advantage is shifting toward service exports and digital innovation. By mandating credit flow into IT and Tourism, the central bank aims to create a more resilient, multi-pillared economy.

Expanded Sector Classifications

Tourism Sector: Includes hotels, resorts, trekking agencies, and travel services, particularly focusing on the development of infrastructure along the Mid-Hill and Postal Highways.

ICT-Based Industries: Covers software development, Business Process Outsourcing (BPO), data centers, cloud computing, and AI research facilities.

Domestic Raw Material Exports: Industries that export at least 40% of their production using local inputs are now categorized as high-priority.

Lending Thresholds for Financial Institutions

The NRB directive sets specific minimum percentages of total loan portfolios that must be dedicated to these productive sectors. Failure to meet these targets results in penalties calculated on the shortfall amount at the highest prevailing bank rate.

Targets for Commercial Banks (“A” Class)

By the end of Poush 2083, commercial banks must maintain:

10% Minimum: Specifically for the Agriculture sector.

20% Minimum: For a combined pool of priority sectors including Tourism, Energy, MSMEs, ICT, and Export-Oriented Industries.

Targets for Development Banks and Finance Companies

“B” Class (Development Banks): Must allocate at least 20% of their total loans to priority sectors.

“C” Class (Finance Companies): Must allocate at least 15% of their total loans to priority sectors.

Implementation Flexibility and Bond Inclusion

To support banks in meeting these rigorous targets, the NRB has introduced several market-friendly mechanisms:

Inter-Bank Loan Trading: Banks struggling to meet specific targets can “purchase” the priority sector loan portfolios of other banks that have exceeded their requirements.

Debenture Eligibility: Investment in Agriculture Bonds or Energy Debentures now counts toward a bank’s mandatory lending quota, encouraging the growth of the corporate debt market.

Surplus Credit Transfer: If a bank exceeds its 10% agriculture mandate, the surplus percentage can be automatically applied to fulfill the 20% priority sector requirement.

Defining the New “Productive” Sectors

The directive provides clear legal definitions to prevent banks from misclassifying loans:

IT Services: Must be registered entities involved in data processing, digital mapping, or knowledge process outsourcing (KPO).

Productive Industry: As defined by the Industrial Enterprise Act 2076, these must involve the physical or chemical transformation of materials.

Green Energy: While hydropower remains dominant, the policy now gives additional weight to solar and wind energy projects to diversify the energy mix.

Anticipated Economic Impact

The expansion of the Nepal Mandatory Sector Lending Policy is expected to unlock significant capital for young entrepreneurs and tech startups.

Job Creation: The IT and Tourism sectors are labor-intensive and can absorb the growing number of skilled youth in the urban workforce.

Foreign Exchange Earnings: Both IT (via service exports) and Tourism are primary sources of US Dollar inflows, helping stabilize Nepal’s Balance of Payments (BoP).

Digital Transformation: Mandated financing for data centers and cloud infrastructure will accelerate the Digital Nepal Framework goals.

Conclusion

The inclusion of Tourism and IT in the Nepal Mandatory Sector Lending Policy marks a pivotal step toward a 21st-century economy. By directing the banking sector’s vast resources into these modern industries, Nepal Rastra Bank is ensuring that financial capital follows the nation’s strategic growth path. While banks face the challenge of developing new risk-assessment models for “intangible” assets like software, the long-term benefit will be a more diversified and technologically advanced financial landscape.

For More: Nepal Mandatory Sector Lending