Nepal Rastra Bank has reduced the mandatory lending thresholds for banks in designated priority sectors.
Under the revised provision, commercial banks will now be required to allocate a minimum of 10% of their total loans to the agriculture sector by mid-January 2027 (Poush-end 2083). Previously, banks were required to lend at least 15% to agriculture by mid-July 2028 (Asar-end 2085).
Similarly, from Poush-end 2083, at least 20% of total lending must go to priority sectors including tourism, micro, cottage, small and medium enterprises (loans up to Rs. 3 crore, and up to Rs. 5 crore for productive industries), energy, IT-based industries, and export-oriented industries using domestic raw materials.
Earlier provisions had required at least 10% lending to the energy sector by Asar-end 2084 and 15% to MSMEs by Asar-end 2085.
The central bank has also stated that if commercial banks exceed the minimum 10% lending requirement in agriculture, the excess can be counted toward fulfilling the overall 20% requirement in other designated sectors.
In addition, development banks must allocate at least 20% of total lending, while finance companies must allocate at least 15% to these priority sectors starting from Poush-end 2083.
Banks and financial institutions that fall short of the required lending ratio may buy or sell priority sector loan portfolios among themselves, by mutual agreement and with applicable fees, for reporting purposes.
Furthermore, investments made in agriculture and energy bonds will also be counted as priority sector lending. This includes bonds issued by public limited companies and public institutions related to agriculture and energy.
The calculation of lending to these sectors will be based on the outstanding loan balance from six months prior, starting from Poush-end 2083, and will be reviewed quarterly thereafter.
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