The NEPSE Journal
Market commentary, data deep-dives, and trading notes from the NEPSE Trading desk.
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.
Nepal’s banking sector is sustaining a 3.74% interest spread, enough for profitability but narrower than in the past. Rising funding costs, growing NPLs, and competitive pressures may squeeze margins further, pushing banks to diversify income sources and improve efficiency.
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.
Nepal’s weighted average deposit rate of 4.02% provides stability but risks being unattractive if inflation stays high. While banks benefit from lower funding costs, savers may feel pressured to seek higher returns elsewhere, making the balance between stability and competitiveness crucial.
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.
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.
Nepal now has 1.36 crore debit card users, reflecting the growing adoption of digital payments alongside traditional cash withdrawals. Debit cards remain central to the payment landscape but will need to evolve further as mobile banking and QR-based systems push Nepal closer to a cash-lite economy.
Internet banking in Nepal has surpassed 22 lakh users, a sign of growing digital adoption that complements mobile banking. While challenges remain in infrastructure, literacy, and security, this growth is an important step toward Nepal’s vision of a cashless future.
Nepal’s mobile banking users have surged to 2.79 crore, highlighting a rapid digital transformation in the financial sector. While the boom boosts inclusion, convenience, and efficiency, it also demands stronger cybersecurity and digital literacy to ensure long-term sustainability.
Nepal’s banking sector has crossed 6 crore deposit accounts, more than double the national population—signaling strong financial inclusion but also highlighting fragmentation, multiple accounts per person, and inactive balances. True inclusion will require focusing not just on numbers but on account activity and financial literacy.