Nepal Has Built the Road. Now It Needs to Build the Car.

Twenty-seven million digital banking accounts. Retail digital payments growing at 71% a year. Over a million QR payment points spanning every corner of the country. Digital wallets and mobile banking reaching communities that branch networks never did. By any measure, Nepal has built a digital payments infrastructure that punches far above its weight.

The credit picture tells a different story. Fewer than two million loan accounts. For every 10 people in the digital banking system, barely one has access to credit. A payments network that reaches nearly everyone and a lending system that reaches almost no one.

The Wall

The reason is structural. Nearly 90% of all bank loans in Nepal are secured against real estate collateral. If you do not own property, you do not get a loan. The system is not designed for the informal economy worker, the returning migrant who wants to start a business or the woman running a small enterprise from her home. It is designed for people who already have assets.

The Cost

When formal credit does not reach people, they do not stop needing it. They find alternatives. And the alternatives in Nepal have proven dangerous.

Microfinance was designed to serve those the banking system cannot reach. Even counting every microfinance borrower, fewer than four in 10 adults have any formal credit at all. And that layer is under severe stress. Over-indebtedness has driven non-performing loans from 2.6% in 2022 to 7.2% by mid-2025. Multiple institutions compete for the same thin slice of borrowers while the majority remains untouched.

Below that, cooperatives fill the vacuum. Over 30,000 of them operate entirely outside Nepal Rastra Bank oversight. When parliamentary probes investigated the sector in 2024, they found systematic fraud with approximately Rs 9,000 crore ($650 million) embezzled. Tens of thousands of depositors, retirees, farmers and housewives lost their savings. The government’s response has been slow and recovery remains incomplete. These people did not lose their savings because they were irresponsible. They lost them because the formal system had no product for them.

And for those who cannot reach microfinance or cooperatives at all, informal moneylenders charge interest rates that commonly reach 
60% to 80%, and sometimes even higher.

The Path Forward

India faced a structurally identical problem a decade ago and used fintech to build the credit layer on top of its payment infrastructure. The mechanism was the Account Aggregator framework, a consent-based system that lets a borrower’s transaction history, utility payments and business data flow instantly to lenders. Transaction history replaced collateral history. In Fiscal Year 2024/25, the framework facilitated approximately INR 1.6 lakh crore ($19 billion) in loans, with the majority going to first-time borrowers the banking system had 
previously ignored.

Nepal has the equivalent data sitting in eSewa and Khalti right now. A merchant in Pokhara who has processed two years of QR payments has a verifiable revenue history. A returnee from Qatar with 18 months of remittance inflows has demonstrated income. The data that would prove creditworthiness without requiring a land ownership certificate already exists. What does not exist is the product layer that reads it.

The Opportunity

The International Finance Corporation (IFC) documents a Rs 49,000 crore ($3.6 billion) financing gap for Nepal’s small and medium enterprises alone. That figure covers businesses only. It says nothing about the millions of individuals with no formal credit of any kind. The total addressable market for digital-first lenders in Nepal, underwriting on cashflow and transaction data, is conservatively Rs 20,000 to Rs 27,000 crores ($1.5 to $2 billion) today, and growing.

Nepal’s fintech founders have already proved the hardest thing: that world-class financial technology can be built from Kathmandu, at scale, against every structural disadvantage. The capability is here. The customer base is here. The next chapter is credit.

What comes next does not require waiting for policy to move first. Working capital loans for merchants, underwritten on QR payment history. Micro-credit for returnee migrants, underwritten on remittance inflows. Credit for individual borrowers with monthly income patterns, underwritten on transaction history rather than salary slips. These products are buildable today, on data that already exists. No dominant digital lender has emerged yet. The market is waiting.

The right regulatory environment, a consent-based data sharing framework and incentives for non-collateral underwriting, will accelerate what early movers prove out. But that is an accelerant, not a prerequisite.

The cooperative crash was not an accident. It was the consequence of a formal system that left millions with nowhere to go. Fintech is the fastest credible path to making sure that never happens again.

The road is built. It is time to build the car.