Banks and financial institutions have gradually increased credit flow, driven by the growth in Nepal's foreign trade. The expansion in working capital loans, term loans for business expansion, and import financing has contributed to this positive trend. In addition, banks have extended more loans for personal housing, real estate transactions, stock market investment, and vehicle purchases.

According to Nepal Rastra Bank’s report published on Sunday, credit to the private sector from banks and financial institutions rose by Rs 361.3 billion during the first nine months of the current fiscal year (FY 2024/25). This represents a 7.1 percent increase compared to mid-July 2024. In the same period last fiscal year, credit flow had grown by Rs 222.2 billion, or 4.6 percent.

Import financing has recorded the highest growth rate among loan categories. Trust receipt (import) loans—used by businesses to finance imports—increased by 60.6 percent as of mid-April 2025. Banks had disbursed Rs 82.83 billion in import credit by mid-July 2024, which rose to Rs 133.27 billion by mid-April 2025. During the same period, margin lending increased by 37.8 percent, while working capital loans rose by 17 percent.

The growth in foreign trade has supported this rise in credit. Nepal’s total merchandise exports surged by 65.5 percent, reaching Rs 188.2 billion by mid-April 2025. Imports also grew by 12.2 percent, reaching Rs 139.53 billion during the same period.

Nepal Rastra Bank spokesperson Ramu Poudel said the rise in imports and exports has driven up credit flow, particularly working capital loans related to imports. He also noted growth in lending for stock market activity and real estate.

Ample liquidity in the banking system has brought down lending rates. As of mid-April 2025, the average interest rate on loans stood at 8.22 percent for commercial banks, 9.59 percent for development banks, and 10.40 percent for finance companies. A year earlier, these rates were 10.55 percent, 12.17 percent, and 13.36 percent, respectively.

Deposits in banks and financial institutions have also increased, supported by higher remittance inflows. By mid-April 2025, deposits had grown by Rs 368.47 billion, a 5.7 percent increase. Remittance inflows reached Rs 1.19 trillion, marking a 10 percent rise compared to the same period last year. In US dollar terms, remittances increased by 7.3 percent to USD 8.74 billion, while the growth in the previous year was 15.2 percent.

Meanwhile, rising outbound travel and education expenses have widened the net service income deficit. Travel income rose by 9.5 percent to Rs 66.54 billion, but travel expenditure increased by 19 percent to Rs 170.39 billion by mid-April 2025. Among this, spending by students studying abroad amounted to Rs 103.84 billion.

Despite the service trade deficit, Nepal maintained a current account surplus of Rs 210.22 billion as of mid-April 2025, up from a Rs 179.83 billion surplus during the same period last year. The country’s gross foreign exchange reserves increased by 18.9 percent, rising from Rs 2,041.10 billion in mid-July 2024 to Rs 2,426.84 billion in mid-April 2025.

In US dollar terms, foreign exchange reserves rose by 15.4 percent to USD 17.63 billion, up from USD 15.27 billion in mid-July 2024. Based on import data for the first nine months of the fiscal year, the current reserves are sufficient to cover 17.1 months of merchandise imports and 14.2 months of combined goods and services imports.

The report also shows that inflation has eased. The year-on-year consumer price inflation stood at 3.39 percent in mid-April 2025, down from 4.61 percent a year earlier.