KATHMANDU, Nov 12: Although Nepal’s overall industrialization remains sluggish, a recent study shows that investment from banks and financial institutions in industries within the Bagmati Province has significantly increased — rising by about Rs 150 billion in a year.
According to Nepal Rastra Bank, the total industrial lending in the province reached Rs 1.211 trillion in the fiscal year 2025/26, marking a 13.8 percent growth from the Rs 1.063 trillion recorded in 2024/25.
Among districts, Kathmandu accounted for the highest share of industrial loans at Rs 1.193 trillion (92.4 percent), while Rasuwa received the lowest, at Rs 130 million (0.01 percent). The high concentration of industries and central offices in Kathmandu explains the city’s dominance. Most industries in Bagmati are located in Kathmandu Valley, Chitwan, and Makwanpur, producing goods such as leather and fabric shoes, carpets, pashmina, felt items, animal feed, wool and cotton garments, decorative goods, noodles, biscuits, beverages, bricks, medicines, and cement.
Sector-wise, electricity, gas, and water industries held a 36.5 percent share of total industrial loans, followed by non-food manufacturing (31.5 percent), agriculture, forestry, and beverages (15 percent), construction (12.8 percent), metal, machinery, and electronics (3.5 percent), and mining (0.7 percent).
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In terms of growth, loans to agriculture, forestry, and beverage industries rose by 22.09 percent, electricity, gas, and water by 21.1 percent, construction by 15.3 percent, and non-food manufacturing by 4.9 percent, while loans to mining and metal and electronics industries fell by 1.34 percent and 2.58 percent, respectively.
A total of 543 new industries were registered in FY 2025/26245 and are expected to contribute to Bagmati’s economic development. The average capacity utilization of sampled industries stood at 38.7 percent, with the noodle industry operating at the highest capacity and garment industries at the lowest.
Production increased in items like beer, cigarettes, transformers, and pharmaceutical products such as tablets, capsules, ointments, dry syrup, and liquid medicines. Meanwhile, output of processed milk, animal feed, noodles, soft drinks, pashmina, garments, paints, bricks, and electricity declined. The capacity utilization dropped from 44.3 percent last year to 38.7 percent during the review period.
Industrial lending accounted for 36.4 percent of total bank loans in Bagmati during the last fiscal year. With falling interest rates, entrepreneurs are expected to take more loans to boost production and employment, tapping into the province’s vast market potential.
The study also highlighted several challenges: delayed reconstruction of roads damaged by natural disasters has disrupted raw material supply and market access, driving up operational costs. Rising land prices, lack of essential infrastructure, youth migration, shortage of skilled labor, raw materials, and limited markets have made establishing new industries and improving productivity increasingly difficult. Accelerating physical infrastructure development, particularly in construction materials such as iron, cement, and bricks, could help stimulate industrial growth in the province, the study added.
