While credit flow to various productive sectors has slowed, most commercial banks have increased lending to the real estate sector in the first five months of the current fiscal year 2024/25.
Among the 20 commercial banks in operation, only four banks – NIC Asia, Himalayan Bank, Sanima Bank, and Siddhartha Bank – have reduced their lending to real estate, while all others have increased it. Kumari Bank recorded the highest growth in real estate loans, disbursing Rs 10.81 billion during this period, a sharp rise from Rs 1.44 billion in the same period last fiscal year.
In total, commercial banks have disbursed Rs 234 billion in real estate loans, marking a 10.81% increase from Rs 211 billion in the same period last fiscal year.
According to Bheshraj Lohani, former president of the Nepal Land and Housing Development Federation, banks have ample investable resources, making it easier to disburse real estate loans. "Interest rates are also low these days," he added.
The Nepal Rastra Bank (NRB) had previously reduced the risk weight for real estate lending and encouraged investment in the sector. Additionally, it increased the loan-to-income ratio from 50% to 70% and introduced a provision requiring a tax clearance certificate for such loans.
Among all banks, NIC Asia Bank has disbursed the highest amount of real estate loans in the first five months of the fiscal year, amounting to Rs 26.71 billion. However, this is 11.49% lower than the Rs 30.18 billion disbursed in the same period last fiscal year, likely due to excessive credit expansion in previous years.
Nepal Investment Mega Bank ranks second with Rs 24.82 billion in real estate loans, while Machhapuchhre Bank has disbursed the lowest, at Rs 1.64 billion.
