NRB Governor Urges Banks to Diversify Lending and Boost Tech Use
NRB Governor Lending Call
1st December 2025, Kathmandu
Nepal Rastra Bank (NRB) Governor Prof. Dr. Bishwanath Paudel has critically observed that banks and financial institutions (BFIs) are currently concentrating their investments in limited sectors.
NRB Governor Lending Call
He strongly asserted that credit expansion must align with local economic needs and priorities. Governor Paudel’s call for diversified and strategic NRB Governor Lending aims to strengthen the foundational economic activities necessary for robust national growth and stability.
Focusing on Productive Sectors
The Governor specifically identified agriculture, tourism, energy, and the manufacturing sector as critical areas. Increasing credit flow to these production-oriented industries will actively drive the economy forward.
He stressed that banks must prioritize production-based sectors when extending credit, carefully balancing this expansion with prudent risk management.
“When extending credit, banks must review local economic priorities alongside risk management. Prioritize production-oriented sectors,” Governor Paudel advised.
This policy direction seeks to shift the focus from consumer loans to capital-generating investments.
Technology Over Interest Rates for Profit
Governor Paudel provided a clear pathway for BFIs to increase profitability sustainably. He suggested that banks should not rely solely on high interest rates for profit growth. Instead, they must redirect their focus towards business expansion, service delivery efficiency, and the effective utilization of technology.
In the age of digital transformation, technological solutions offer scalable pathways to lower operating costs and reach more customers.
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Adopting advanced tech allows banks to process transactions faster and enhance customer experience, thereby sustainably increasing their market share and profits without solely depending on lending rates.
Addressing Liquidity Management Challenges
The Governor pinpointed liquidity management as the main challenge currently facing the Nepali economy. He expressed concern over a paradox: even when the banking sector experiences adequate liquidity and relatively low interest rates, investment in large-scale infrastructure projects remains subdued.
This situation requires immediate attention and decisive action from all financial stakeholders. Governor Paudel argued that banks themselves must actively participate in fulfilling the objectives set out in the Monetary Policy.
He also signaled that fiscal and monetary policies will continue to become more flexible to support the economy. Banks must position themselves to capitalize on these loosening regulations immediately.
The Need for Increased Capital Expenditure
Governor Paudel reminded all sectors that they share equal responsibility for economic recovery. Analyzing the current economic situation, he stressed the critical need for the government to accelerate capital expenditure.
Increased government spending on infrastructure acts as a major catalyst, injecting liquidity and stimulating demand across various sectors.
The Governor confirmed that diverse economic activities are already increasing momentum. He concluded by asserting that, to make this growth more dynamic, every sector must be given due priority and actively pushed forward.
The implementation of strategic NRB Governor Lending policies is essential to sustain this positive trajectory and ensure broad-based economic growth.
For more: NRB Governor Lending Call
