Nepal Rastra Bank (NRB) has amended its "Digital Lending Guidelines, 2078," significantly expanding the scope of loans that can be disbursed through electronic channels.

Under the revised provisions, micro, small, and medium enterprises (MSMEs) will now be eligible to receive digital loans of up to Rs 1 million, marking a major step toward improving financial access for small businesses.

According to the central bank, the updated guideline aims to facilitate credit flow based on digital transactions while strengthening financial inclusion and access to formal financing.

The revised framework allows individuals whose salary, professional income, or business earnings are deposited into accounts maintained at banks and financial institutions to obtain digital loans of up to Rs 500,000. Such loans can be repaid over a maximum period of three years.

Similarly, the digital loan limit for other individual borrowers has been set at Rs 200,000, with a repayment period of up to three years.

For MSMEs, NRB has introduced two categories of digital lending. Businesses requiring short-term working capital can access loans of up to Rs 500,000 with a repayment period of one year.

For long-term working capital requirements, MSMEs can obtain digital loans of up to Rs 1 million. The repayment period for such loans will be determined according to the working capital lending policy of the respective bank or financial institution. Borrowers may repay the loan either in lump sum or through installments.

The revised guideline also provides greater clarity regarding the role of Payment Service Providers (PSPs) and Technology Service Providers (TSPs) in the digital lending ecosystem.

Banks and financial institutions may appoint PSPs as authorized representatives to assist with processes ranging from loan applications to loan recovery.

Likewise, with customer consent, PSPs and technology service providers may share transaction histories, payment records, and business-related data with banks to support digital credit assessment.

NRB believes this approach will encourage transaction-based lending and reduce reliance on traditional collateral and paper-based evaluation methods.

However, the central bank has clarified that even when third-party data is used in loan assessment, all associated risks and liabilities will remain the responsibility of the lending bank or financial institution.

To ensure data privacy and customer protection, banks must enter into formal agreements with institutions providing customer information. Such agreements must clearly address data-sharing procedures, confidentiality standards, authenticity requirements, and customer consent mechanisms.

Furthermore, banks and financial institutions will be required to inform NRB's Payment Systems Department after entering into such agreements, according to the revised guideline.