Loans Decline in Real Estate Sector While Import-Related Credit Sees Significant Growth

Summary: In the first nine months of the current fiscal year, loans from banks and financial institutions increased by only 5.7 percent. Trust receipt loans surged by 32 percent, reaching NPR 165.24 billion. Loans in the housing and real estate sector declined by 3.5 percent, although residential loans up to NPR 30 million increased. Kathmandu, 3 Jestha.

During the first nine months of the current fiscal year, total loans disbursed by banks and financial institutions increased by only 5.7 percent. Compared to the end of Ashadh last fiscal year, an additional NPR 311.95 billion loans were issued by the end of Chaitra in the current fiscal year. The total loans disbursed until Chaitra amount to NPR 5.809 trillion.

Analyzing by sector, trust receipt loans—short-term credit extended to traders and importers by banks and financial institutions until goods are sold—recorded the highest growth rate. This type of import-related loan increased by 32 percent from the end of Ashadh to NPR 165.24 billion by the end of Chaitra.

At the end of Ashadh, trust receipt loans stood at NPR 125.18 billion. This increase occurred despite the overall growth in imports. Conversely, loans extended to the housing and real estate sector showed a decline. According to Nepal Rastra Bank data, loans in the real estate sector decreased by 3.5 percent from the end of Ashadh to the end of Chaitra. The total outstanding loans in this sector were NPR 266.37 billion at the end of Chaitra, compared to NPR 275.95 billion at the end of Ashadh. However, residential home loans up to NPR 30 million saw an increase. Such lending reached NPR 458.75 billion by the end of Chaitra, up from NPR 417.56 billion at the end of Ashadh.

The recent drop in loans in the housing and real estate sector is attributed to a decline in property transactions and property values. However, the residential loan segment grew due to repeated increases in the loan limit, which was raised from NPR 20 million to NPR 30 million under the current fiscal year’s monetary policy.