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Agriculture Loans Fall by 1.4% While Production and Construction Sectors Expand — NRB Data Reveals
NRB’s data signals a gradual structural transformation in Nepal’s credit ecosystem — from traditional agriculture-led lending toward industrial, infrastructure, and service-oriented financing. While this marks a positive shift toward productive investment, it also underscores the need to strengthen rural credit access to ensure inclusive economic growth.
Sandeep Chaudhary
1 min read
Nepal Rastra Bank’s latest sectorwise credit report for Mid-August 2025 reveals a clear shift in Nepal’s credit distribution pattern — with agriculture loans declining by 1.4%, while production and construction sector lending continued to expand. The total agriculture credit fell to Rs. 412.1 billion, reflecting a slowdown in farming, livestock, and agro-services borrowing. Sub-segments such as farming services, animal husbandry, and other agriculture activitiesshowed contraction, indicating reduced capital mobilization in rural areas. This trend is partly attributed to lower seasonal demand, tighter collateral-based lending, and cautious banking exposure to volatile agricultural returns.
In contrast, production sector loans grew by 0.8%, reaching Rs. 890.8 billion, driven primarily by industries such as cement, iron and steel, textiles, and processed foods. The steady industrial credit growth highlights rising momentum in Nepal’s manufacturing and value-added industries, signaling increased confidence in medium to large-scale enterprises. Similarly, the construction sector recorded a 0.6% rise in outstanding loans, crossing Rs. 232.8 billion, mainly due to rising financing in infrastructure, urban housing, and heavy construction projects like roads and bridges. This shows that the ongoing industrial and infrastructural push continues to dominate the lending landscape, compensating for the agricultural slowdown.
Meanwhile, service sector loans remained mixed — with growth in healthcare, tourism, and automobile-related services, but a decline in hotel and education financing. The transportation and energy sub-sectors maintained steady performance, supported by increased loans in electricity and gas services. These developments point to a broad credit rebalancing where financial institutions are channeling more funds into capital-intensive and revenue-generating sectors, while credit in lower-margin sectors such as agriculture and microfinance is contracting.
Written by
Sandeep Chaudhary