NRB lowers priority sector lending to 30% for commercial banks

Nepal Rastra Bank (NRB) has revised its policy on priority sector lending, lowering the mandatory threshold for different classes of banks and financial institutions to channel credit into key sectors of the economy. 

The central bank has long directed commercial banks (Class A), development banks (Class B) and financial institutions (Class C) to invest a fixed portion of their loan portfolios in agriculture and other productive sectors. 

Under the new provision, commercial banks are now required to allocate at least 30% of their total lending to priority sectors, down from the previous 40% requirement. As per the revised guidelines, effective from mid-January 2027 (Poush-end 2083), they must ensure that at least 10% of their total lending goes to agriculture, which was previously mandated at 12% effective from mid-July 2026 (Ashadh 2083).

Similarly, a minimum of 20% of total loans must be invested in sectors such as tourism, micro, small and medium enterprises (MSMEs), energy, information technology, and export-oriented industries based on domestic raw materials.

Within MSMEs, the policy caps loans at up to NRs 30 million, with up to NRs 50 million for productive industries.

NRB has introduced flexibility for banks exceeding the minimum agricultural lending threshold. If a bank is unable to meet the 20% requirement in other priority sectors, excess lending in agriculture can be adjusted toward the overall target.

Last month, NRB had broadened the scope of priority sector lending, which previously included agriculture, micro and small enterprises, and energy. The revised framework included information technology, medium enterprises, export-oriented industries, and tourism within the priority ambit. 

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In case of class ‘B’ financial institutions, they are now required to allocate at least 20% of their total lending to designated sectors — agriculture, MSMEs, IT, energy, and export industries, while Class ‘C’ institutions must allocate at least 15%.

Investments made in agriculture and energy-related instruments can be counted as part of their lending to priority sectors, says the directive. Investments in bonds and debentures issued by public limited companies in the agriculture sector, as well as those issued by public institutions and public limited companies in the energy sector, will qualify as sectoral lending.