NRB eases directed lending rules, broadens priority sectors

Kathmandu: Nepal’s central bank has relaxed its directed lending requirements, lowering the mandatory share of loans banks must channel into priority sectors from 40 percent to 30 percent. Previously, banks were required to allocate 15 percent of total lending to agriculture, 10 percent to energy, and 15 percent to micro, cottage, small and medium enterprises (MSMEs). Under the revised framework, however, the scope of priority sectors has been expanded to include tourism, information technology, and industries based on domestic raw materials, while the overall quota has been reduced.

The changes were introduced through an amendment to the unified directive for banks and financial institutions issued on Tuesday. The central bank has cut the minimum lending requirement for agriculture to 10 percent, down from the earlier target of 15 percent that was to be met by mid-July 2028. The new rule, effective from mid-January 2027, mandates banks to maintain at least 10 percent of their total loan portfolio in agriculture.

Similarly, the previous requirements for lending to energy and MSMEs have been restructured. Instead of separate quotas, banks will now need to ensure that a combined 20 percent of total lending goes to energy, tourism, MSMEs, information technology, and domestic raw material-based industries. In addition, commercial banks that exceed the minimum 10 percent threshold in agriculture will be allowed to count the excess lending toward any shortfall in the combined 20 percent requirement for the other sectors.

The revised policy also sets different thresholds for other financial institutions. Development banks will now be required to allocate 20 percent of their loans to priority sectors, while finance companies must maintain a 15 percent share. For development banks, eligible sectors include agriculture, tourism, energy, information technology, MSMEs with loans up to Rs 30 million, manufacturing industries with MSME loans up to Rs 50 million, and export-oriented industries based on domestic raw materials. These institutions will need to comply with the new thresholds starting mid-January 2027.