NRB Expands Priority Sector Lending to Tourism, IT & Export Industries — What It Means

For decades, Nepal Rastra Bank (NRB) has quietly forced banks to lend a fixed share of their money to sectors the market alone wouldn't prioritise — agriculture, energy, small businesses. In 2026, that list got a major update. Tourism, information technology, and export-oriented industries are now formally part of Nepal's priority sector lending framework, and NRB is even encouraging banks to help finance data centres, cloud computing, and AI infrastructure. Here's exactly what changed and what it means if you run a business in one of these sectors.

What Is Priority/Directed Sector Lending in Nepal (History Since 1974)

Priority sector lending — also called directed lending — is a regulatory requirement that forces banks and financial institutions to channel a minimum share of their total loans into sectors NRB considers economically important but historically underserved by commercial credit. NRB first introduced this concept in 1974, focused narrowly on the small sector. Over the following decades, the scope steadily grew to include agriculture and energy, becoming a permanent fixture of how Nepal's banking system supports broader economic development goals rather than purely profit-driven lending decisions.

New Sectors Added: Tourism, IT & Export-Oriented Industries

Through the mid-term review of the Monetary Policy for FY 2025/26, announced in February 2026, NRB expanded the scope of sectoral lending to explicitly include tourism, information technology-based industries, and export-oriented industries that use domestic raw materials. This followed shortly after with a formal amendment to the Unified Directive in March 2026, which restructured how these quotas are calculated. Rather than separate fixed quotas for each sector, commercial banks must now direct a combined 20% of total lending across energy, tourism, MSMEs, IT-based industries, and qualifying export businesses — alongside a separate 10% minimum for agriculture — bringing the overall priority-sector requirement down from 40% to 30% of total lending.

Foreign Investment Facilitation for Data Centres, Cloud, AI & Robotics

One of the more forward-looking pieces of this reform is NRB's stated intent to facilitate foreign investment in infrastructure development covering data centres, cloud computing, robotics laboratories, and artificial intelligence. The central bank has also said it will encourage co-financing by domestic banks and financial institutions in such projects and has raised the ceiling on banks' permitted foreign investments. For Nepal's fast-growing tech ecosystem, this signals a genuine attempt to unlock capital for the kind of high-cost digital infrastructure that has historically been difficult to finance domestically.

How Businesses Can Qualify for Priority Sector Loans

Eligibility depends on your sector and loan size. Under the revised framework, tourism businesses, micro/cottage/small/medium enterprises with loans up to Rs 30 million, productive industries with loans up to Rs 50 million, energy projects, IT-based businesses, and export industries using domestic raw materials can all qualify under the combined priority-sector bucket. To access this financing, businesses typically need to demonstrate they fall within the sector definitions set by NRB, meet the applicable loan-size thresholds, and go through their bank's standard credit appraisal process — priority-sector status affects a bank's regulatory obligation to lend, not an automatic guarantee of approval for any individual borrower.

Lending Limits and Compliance Requirements for Banks

The compliance requirements now vary by institution type. Class A commercial banks must direct at least 10% of lending to agriculture and a combined 20% to the broader priority-sector basket. Class B development banks face a 20% combined requirement, while Class C finance companies must maintain at least 15%. The long-standing requirement that 5% of lending go to deprived sectors remains unchanged across all institution types. NRB has also introduced a "reporting rights" mechanism, allowing institutions with lower exposure to priority sectors to effectively buy compliance from banks with higher exposure, based on mutual agreement — a flexibility measure meant to ease the burden on banks struggling to find qualifying borrowers.

Expected Impact on Nepal's IT and Tourism Sectors

For Nepal's IT sector — which has grown rapidly on the back of outsourcing, software services, and a young, increasingly skilled workforce — formal inclusion in priority lending could meaningfully lower the cost and improve the availability of business credit, particularly for startups and small tech firms that have historically struggled to secure loans without heavy collateral. Tourism businesses, still recovering unevenly since the pandemic and facing seasonal cash-flow challenges, stand to benefit from more predictable access to working capital and expansion financing. Combined with NRB's openness to foreign co-financing for AI and data-centre infrastructure, this reform could accelerate investment in exactly the kind of higher-value, export-generating sectors Nepal's economy needs to diversify beyond remittances.

Challenges: Will Banks Actually Lend to These Sectors?

Good intentions don't always translate into good outcomes. Nepal's banking sector is already sitting on Rs 7.749 trillion in deposits against only about Rs 5.8 trillion in loans — a sign of sluggish credit demand rather than a shortage of lendable funds. New business registrations actually fell in the first half of FY 2025/26 compared to the year before, with industrialists citing land acquisition hurdles, labour shortages, and regulatory uncertainty as ongoing obstacles. More pointedly, priority-sector lending itself has been blamed for contributing to rising bad debt, with the system-wide non-performing loan ratio reaching 5.6% by the third quarter of FY 2025/26 — partly because loans pushed into these sectors to meet regulatory quotas don't always go to genuinely creditworthy borrowers. At least one major bank, Standard Chartered Bank Nepal, was fined in recent months for failing to meet earlier priority-lending thresholds, underscoring that compliance pressure — not just opportunity — is part of what's driving this expansion.

Frequently Asked Questions (FAQs)

1. Which new sectors were added to NRB's priority lending list in 2026?
Tourism, information technology-based industries, and export-oriented industries using domestic raw materials were added through the mid-term review of Monetary Policy 2025/26 and the subsequent Unified Directive amendment.

2. What is the current priority-sector lending requirement for commercial banks?
Commercial banks must direct at least 10% of lending to agriculture and a combined 20% to energy, tourism, MSMEs, IT-based industries, and qualifying export businesses — a total of 30%, down from the earlier 40%.

3. Can foreign investors finance data centres or AI infrastructure in Nepal?
NRB has said it will facilitate foreign investment in data centres, cloud computing, robotics labs, and AI infrastructure, and has raised the ceiling on banks' permitted foreign investments to encourage co-financing.

4. Is priority sector lending causing problems for banks?
Yes — rising non-performing loans partly tied to priority-sector lending have been a growing concern, with the system-wide NPL ratio reaching 5.6% by the third quarter of FY 2025/26.

5. Does every tourism or IT business automatically qualify for a priority-sector loan?
No. Businesses still need to meet NRB's sector and loan-size definitions and pass their bank's normal credit appraisal process; priority-sector status affects a bank's regulatory quota, not individual loan approval.

Conclusion

NRB's decision to fold tourism, IT, and export industries into its priority-sector lending framework — alongside openness to foreign-financed data centres and AI infrastructure — marks a real attempt to diversify where Nepal's credit actually flows. Whether this translates into genuinely cheaper, more accessible financing for these businesses, or simply becomes another regulatory box for banks to tick, will depend heavily on how effectively NRB enforces the new rules and whether banks can find creditworthy borrowers in these emerging sectors.

Running a tourism, IT, or export business and wondering how these changes apply to you? Follow Bandhu Fintech for more practical breakdowns of Nepal's banking and credit policies.