Credit Cards Still Low at 3.18 Lakh: Why Nepal Lags in Credit Penetration

Published on September 23, 2025

As of Saun End, 2082 (Mid-August 2025), Nepal’s banking sector has issued only 3.18 lakh credit cards, a strikingly small figure compared to 1.36 crore debit card users and 2.79 crore mobile banking customers. Among these, commercial banks (Class “A”) account for the vast majority with 3.15 lakh cards, while development banks (Class “B”) contribute just 3,357 cards, and finance companies (Class “C”) have virtually no presence in this segment. This gap highlights Nepal’s lag in building a credit-driven consumer finance culture.

Several factors explain this underpenetration. First, credit cards require banks to extend unsecured credit, which carries higher risk in a country where Non-Performing Loans (NPLs) have already reached 4.62% overall. Institutions, particularly smaller ones, are reluctant to push such products, fearing repayment defaults and fraud risks. Second, Nepal’s banking system remains heavily deposit-focused, with savers more inclined toward fixed or savings accounts rather than borrowing-based instruments. Third, the informal economy plays a significant role—many consumers still rely on cash or personal lending channels, limiting demand for formal credit products like credit cards.

Cultural and behavioral factors also weigh heavily. Nepali households tend to prefer debt aversion and view credit cards with suspicion, associating them with overspending or financial traps. Moreover, many customers lack the financial literacy to manage revolving credit responsibly. High fees, limited merchant acceptance, and relatively underdeveloped e-commerce ecosystems further restrict credit card adoption.

This low penetration contrasts sharply with the rapid rise of mobile banking and QR-based payments, which provide convenience without the risks of debt. While mobile and digital wallets thrive in daily retail use, credit cards are still seen as niche products for urban elites, corporates, or frequent international travelers.

For the economy, the absence of a strong credit card culture means slower growth in consumer finance, lower household leverage, and limited development of retail credit markets. At the same time, it shields households from debt-driven instability. Going forward, broader adoption will depend on improving financial literacy, expanding merchant acceptance, reducing fees, and building trust in formal credit systems.

Nepal’s Export Boom: Soybean Oil Leads, But Fragile Structure Raises Red Flags

Nepal’s Export Boom: Soybean Oil Leads, But Fragile Structure Raises Red Flags Nepal’s trade statistics for the first two months of fiscal year 2082/83 (mid-July to mid-September 2025) present a paradox. On the surface, the numbers appear highly encouraging. Exports surged by an astounding 88.57 percent, climbing to Rs. 47.31 billion from Rs. 25.09 billion in the same period of the previous fiscal year. This kind of growth, rarely seen in Nepal’s export history, immediately captured headlines and gave policymakers some room to celebrate. But a closer look at the structure of exports tells a different, more sobering story. The surge has been driven disproportionately by one commodity—soybean oil—which alone accounted for 56.84 percent of total exports. The rest of the basket, while diverse, still remains limited to traditional items such as tea, coffee, spices, textiles, garments, carpets, and wool. These goods, though significant, face constraints ranging from global competition to dependence on imported raw materials. Thus, while the numbers shine brightly on paper, the underlying reality suggests that Nepal’s export engine is running on shaky foundations.

Nepal’s Import Dependence Deepens: Petroleum, Oils, and Machinery Dominate Trade

Nepal’s Import Dependence Deepens: Petroleum, Oils, and Machinery Dominate Trade Kathmandu – Nepal’s trade data for the first two months of fiscal year 2082/83 (July–September 2025) reveals an import-heavy economy increasingly dependent on petroleum, edible oils, machinery, and vehicles. According to the Department of Customs, total imports stood at Rs. 305.15 billion, while exports were just Rs. 47.31 billion, leaving a massive trade deficit of Rs. 257.83 billion in only two months.

Margin Trading in Limbo for Two Decades: Policy Ambiguity and Technical Gaps Hold Back Reform

Margin Trading in Limbo for Two Decades: Policy Ambiguity and Technical Gaps Hold Back Reform Kathmandu – It has been nearly two decades since discussions on margin trading began in Nepal’s capital market. Yet the facility remains incomplete and largely ineffective. Introduced to help investors purchase shares even with limited capital, the system has faltered due to policy ambiguity, technical weaknesses, and lack of adequate resources. In 2017 (2074 BS), the Securities Board of Nepal (SEBON) issued a directive on margin trading, raising expectations among investors and brokers. Some brokerage firms even began limited operations. However, confusion in the directive itself, difficulty in mobilizing funds through banks, and systemic bottlenecks forced the service to shut down within a short span of time, leaving investors disappointed.

Savings vs. Fixed Deposit Returns: Are Nepali Households Choosing Long-Term Lock-ins?

Nepali households are increasingly choosing fixed deposits (48% of total) over savings deposits (37%), lured by higher returns. While this ensures security and stable bank funding, it reduces household liquidity and raises banks’ funding costs, reflecting both cautious saver behavior and limited investment alternatives.

Credit Rates at 7.76%: Borrowing Costs and Their Impact on Businesses

Nepal’s average lending rate of 7.76% provides businesses with relatively affordable credit, encouraging investment and growth. Yet, for SMEs and struggling sectors, costs remain a challenge. Rising defaults highlight the need for caution, making the balancing act between supporting borrowers and ensuring bank stability critical.

6,526 Bank Branches Nationwide: Physical Expansion vs. Digital Shift

Nepal’s banking sector operates 6,526 branches, ensuring nationwide access but facing challenges from the rapid digital shift. While branches remain essential for rural inclusion and complex transactions, mobile and internet banking are reshaping customer preferences. The future lies in balancing physical presence with digital transformation.

Credit Cards Still Low at 3.18 Lakh: Why Nepal Lags in Credit Penetration

Nepal’s credit card users stand at just 3.18 lakh, far behind debit and mobile banking adoption. Risk aversion, cultural preferences, limited merchant acceptance, and weak financial literacy hinder growth. While this protects households from debt risks, it also shows Nepal’s untapped potential in consumer credit markets.