Kathmandu. KATHMANDU: Chairman of Confederation of Bank and Financial Institutions Nepal (CBFIN) Prachanda Bahadur Shrestha has said that the flow of loans is relatively poor due to the lack of confidence among the investors.

In an interaction with the financial journalists here today, Chairman Shrestha said that the loan flow was not comparatively high despite the low interest rate due to lack of confidence among the entrepreneurs due to sufficient liquidity in the banks. Stating that the industrialists are now in a wait-and-see mode for investment, he said this has had an impact on the banking sector. He said that some of the faults of the banks were also due to the increasing number of bad loans of the banks in recent times.

“There is some unhealthy competition in the banking sector as well, there are problems like opening many branches and increasing loans as collateral, we need to improve it,” Shrestha said.

According to CBFIN, bad loans currently stand at 5.34 percent. This is the highest in the last 10 years. The bank’s bad loans stood at 4.62 per cent in 2025 and 2.63 per cent in 2017.

Rajesh Upadhyaya, vice-president of CBFIN, said that the banking sector has been affected due to the problem in the overall economy. He, however, said that the recent political changes have raised hope among all.

“The political change has raised a big hope in general and the government is now in course of maintaining good governance. He stressed on the need of creating investment-friendly environment as there was no alternative to increasing investment for the economy of $100 billion in seven years. He also acknowledged the unhealthy competition in the banking sector and said that it is necessary to improve it.

Manoj Kumar Goyal, general secretary of CIFIN, said that the slow loan flow was due to the slowdown in the construction sector, but the rise in bad loans did not weaken the banking sector. “The interest rate in the banks is decreasing, but the risk of capital flight has also increased due to the weak interest rate of deposits,” he said, adding, “The banking sector is also a reflection of the economy. ”