KATHMANDU: Nepal Rastra Bank has warned that the practice of “loan evergreening”-where banks extend fresh loans or restructure existing debt to conceal troubled assets-remains widespread despite repeated regulatory scrutiny.

In its latest banking supervision report, the central bank found banks rolling over overdue loans, issuing new credit to repay old debts and temporarily closing loan accounts to improve quarterly financial statements.

It also noted weaknesses in loan restructuring, risk assessment and credit monitoring. The report comes as non-performing loans at commercial banks rose from 2.98% in FY2022/23 to 4.44% in FY2024/25, while the International Monetary Fund has also raised concerns over asset quality and urged stricter loan classification and provisioning.