Kathmandu. Nepal Rastra Bank has said that recently increasing bad loans and non-banking assets are seen as a challenge for the banking sector. The central bank announced this while publishing the annual supervision report.

According to the central bank, banks have invested excessive loans in non-productive sectors after Covid and this has caused problems. According to the report of the Central Bank, the slowdown in the construction sector after the Covid-19, 'overfinancing' and the use of banking loans for other than intended purposes and the increase in interest rates have reduced the borrower's ability to repay the loan.

Due to this, bad loans have been increasing recently, according to the Central Bank. Similarly, the recent increase in risky assets, the increase in bad loans and the increased risk burden on the loans of some sectors by the central bank has also put pressure on the banks' capital, according to the National Bank. The report mentions that the primary capital of some banks is under severe pressure.

According to the central bank, misuse of current capital loans, increasing banking fraud, digital banking and technology risks are also challenges.