Decline in Loans to Marginalized Groups in Nepal

Kathmandu: Due to rising issues with loan recovery, banks and financial institutions have reduced the size of loans flowing to marginalized groups.

According to Nepal Rastra Bank, loans to marginalized groups, which stood at 3.65 Kharba 65 Arba NPR in Ashad 2081, fell by 18.88% to 2 Kharba 96 Arba 9 Crore NPR in Ashad 2082. Meanwhile, overall loan disbursement increased by 8.17%.

During this period, loans to marginalized groups declined across all provinces, with Madhesh Province experiencing nearly a 40% drop. 

Due to strict regulations by the central bank, limits on microfinance loans, and weak recovery caused by non-performing loans, banks have been hesitant to increase investment in this sector. 

However, with the recent increase in microfinance loan limits, loan expansion is expected in the coming days.