Gold and silver-backed lending from banks and financial institutions has seen a notable rise, despite the Nepal Rastra Bank (NRB) imposing a cap on such loans.
According to the latest data from the central bank, loans secured against gold and silver collateral have reached Rs 6.277 billion between mid-October and mid-November of the current fiscal year. This marks a 22.13% increase compared to the same period last year, when the figure stood at Rs 5.139 billion.
This growth comes despite NRB’s recent intervention, which placed a cap on individual loans secured against gold and silver at Rs 5 million. Surprisingly, even in the one month since this cap was introduced, banks have disbursed nearly Rs 2 billion in such loans.
An NRB official said that the cap was set to minimize the risk to banks, as the price of gold continues to rise. "As the price of gold has gone up, we imposed the limit to reduce potential risks for banks," the official said, adding that the central bank is currently assessing the impact of these loans. Banks have been given until mid-July 2026 to fully comply with the new limits, after which a clear picture of the situation will emerge.
The price of gold has consistently remained above Rs 100,000 per tola since last year. In Nepali society, gold and silver are not only used for jewelry but are also seen as a form of savings that can be easily converted into cash during times of financial need. Over the years, while people initially sought loans against gold from jewelry shops, they are now increasingly turning to banks and financial institutions for these loans.
Banks have responded by offering short-term loans under consumer loan categories, with the process being quicker and the interest rates more attractive compared to other loan options. This has made gold and silver-backed loans a popular choice among the public.
