KATHMANDU: Nepal Rastra Bank Governor Dr. Biswo Nath Poudel has raised concerns over the growing concentration of credit disbursement within Nepal’s banking and financial system.

Speaking during a meeting of the Finance Committee under the House of Representatives, Governor Poudel said a disproportionately large share of loans is going to a limited group of borrowers, raising questions about fairness and productivity in credit distribution.

Citing official figures, Governor Poudel revealed that out of approximately 1.94 million loan recipients, just 0.01 percent—a tiny fraction—have taken up 3.9 percent of the total loans. “This points to a worrying trend,” he said. “We must ask ourselves whether directing such a large volume of loans to a few individuals benefits the productive sector or merely concentrates financial power.”

The discussion was held in the context of the proposed amendment to the Bank and Financial Institutions Act (BAFIA), 2073 (2017), which aims to improve transparency, governance, and accountability in Nepal’s banking sector.

Governor Poudel explained that the amendment seeks to clearly define the roles of bank directors and businesspersons, and better identify individuals with significant ownership or connections to financial institutions. The move is intended to limit potential conflicts of interest and ensure that those in positions of authority are not abusing access to capital.

He emphasized that the amendment would provide clearer rules on how much a director can borrow from their own institution—an issue that has often remained ambiguous under the current legal framework.

Supporting the need for revision, NRB Executive Director Guru Prasad Poudel added that the existing BAFIA does not accommodate the rapidly evolving digital banking landscape, making legal reform urgent. He noted that total outstanding credit in Nepal currently stands at around Rs 5.5 trillion.

The proposed changes aim not just to plug legal loopholes but to ensure that the country’s credit flows toward genuinely productive sectors and a broader base of borrowers, thereby enhancing economic inclusivity and resilience.