Blog Post

Asset Reconstruction Companies: Addressing Nepal’s NPL Crisis

The Government of Nepal’s 2025/26 budget (FY2082/83) proposed creating a specialized Asset Reconstruction Company (ARC) to clean up banks’ balance sheets by buying non-performing loans (NPLs) and illiquid collateral (non-banking assets). This initiative marks a part of a broader financial sector reform, motivated by persistent stress in Nepal’s banking system.

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