Sustainable banking protects the ecology and economy

Nepali Times spoke to Manoj Kumar Gyawali, CEO of Nabil Bank about the post-GenZ economic condition of the country. Excerpts:

Nepali Times: With COP30 in Brazil having failed to agree on tangible goals on phasing out fossil fuels, how important is the concept of sustainable banking in Nepal?

Manoj Kumar Gyawali: Sustainable banking is not optional anymore for countries like Nepal. It’s essential. We are one of the most climate-vulnerable countries in the world, and our financial decisions today will determine the kind of Nepal we leave behind.

When Nabil joined the Partnership for Carbon Accounting Financials (PCAF) it encouraged us to take a much closer look at our financed emissions. And the truth is, once you start measuring your impact, you can’t unsee what the numbers tell you. It naturally pushes you to rethink how and where you deploy capital.

For Nabil Bank, sustainable banking is about more than compliance, it’s about directing finance toward sectors that safeguard the environment, uplift communities, and strengthen governance. Frameworks like PCAF give us a credible, globally recognised way to measure and manage our ESG impacts.

That level of transparency and accountability not only improves our own decision-making, it also positions Nepal to tap into blended finance and other concessional funding streams that reward responsible, forward-looking investments.

So, for Nepal, sustainable banking is not a niche activity - it’s central to how we operate.

But is sustainable banking itself sustainable, given that international commitment to climate financing is not adequate to tackle climate breakdown?

This is a concern I hear quite often, and it’s valid. Global climate finance must increase, especially for countries like Nepal. Our economy is already feeling the impact of climate change across agriculture, hydropower, tourism. But sustainable banking, in my view, does not depend solely on external funding.

For us, it’s fundamentally about managing climate and environmental risks more intelligently, understanding the footprint of our own portfolio, and reallocating capital toward climate-positive and resilient sectors. These are things we must do anyway if we want long-term financial stability. It also means embedding strong ESG practices into our daily operations, supporting social impact, advancing financial inclusion, and driving sustainable economic development.

So even if global climate finance remains inadequate, sustainable banking is planned to be sustainable for Nepal in long run. It strengthens the resilience of our financial system, safeguards our clients, and positions banks to tap into emerging opportunities in the green economy. More importantly, it ensures that Nepal’s development pathway remains environmentally responsible, socially inclusive, and anchored in good governance. For now, we are not looking at whether sustainable banking is sustainable financially but considering our responsibility as the leading bank of Nepal.

Nepal’s banks, including yours have a lot of exposure in hydropower. Is there not a need to diversify Nepal’s energy mix

Hydropower is and will remain Nepal’s strongest natural advantage. At Nabil, we have financed 56 hydropower projects across 37 rivers in 21 districts with a total installed capacity of over 3,000 MW, so we understand the scale and importance of this sector.

But we also cannot ignore the realities of climate change — unpredictable rainfall, increased glacier melt, more frequent glacier lake outburst incidents, floods, and landslides. These risks make it clear that while hydropower is essential, Nepal must diversify its energy mix to remain resilient.

The good news is Nepal has enormous solar potential and wind corridors. Our national commitments already call for at least 15% of total energy demand to come from clean energy, with 5–10% from solar and other renewables. This creates real opportunities for banks like Nabil to support solar, wind, and emerging clean technologies alongside hydropower. We have already approved financing of 5 solar projects having a total capacity of 120 MW.

Tax rebates on EVs allowed Nepal to take a lead in adopting battery-operated vehicles in Nepal. How can we build on this to reduce our petroleum import bill?

The EV push has already shown results—we saw a reduction of nearly Rs22 billion in our petroleum import bill in 2024/25. That's a notable achievement.

But if we want to truly scale EV adoption, we need three things: More charging infrastructure that is reliable, widespread, and commercially viable, Local assembly and value creation we should be assembling EVs here, and Stable policy that gives people and businesses confidence to invest.

We are ready with financing models for EV fleets, public transport, and charging infrastructure. With the right ecosystem, Nepal can significantly cut its oil dependency.

The GenZ uprising showed the urgent need for transparency in government and investment in productive sectors to create jobs. What would be the banking sector’s role in this?

The GenZ movement is more than a protest, it’s a clear message. Young Nepalis are demanding transparency, good governance, and real opportunities at home, and their concerns could be considered justified. The banking sector has a major responsibility: we need to direct more lending toward the real economy, sectors that create jobs, build productivity, and strengthen long-term growth, while also encouraging businesses to adopt stronger ESG practices.

Our financing has helped support around 112,000 direct jobs, with nearly 30% held by women. And through initiatives like the Nabil School of Social Entrepreneurship and our wider CSR programs, we’re working directly with communities to uplift the most vulnerable and nurture the next generation of entrepreneurs.

Across Nepal we also see evidence of haphazard over-development, at Nabil do you have guidelines about projects that result in environmental degradation?

Absolutely. We cannot afford to support development that harms the environment, it eventually becomes a financial risk as well. Environmental stewardship is one of our core priorities. Haphazard development may look profitable in the short term, but it leads to long-term economic, social, and ecological losses and ultimately becomes a financial risk.

Nabil has a strong Environmental and Social Risk Management (ESRM) Guideline, a clear exclusion list in our credit policy, and a Sustainable Banking Policy to guide our decisions.

Every project we finance must meet both local regulations and international standards. If it doesn’t, we simply don’t fund it. Our goal is straightforward: to support development that is responsible, sustainable, and in Nepal’s long-term interest.

Nepal’s macroeconomy is looking good, remittances are up, but the economy is not growing as fast as it should. Banks have cash, but no one is borrowing. Do you see a light at the end of the tunnel?

Nepal’s economy today carries both optimism and caution. As you say, remittances are strong, reserves are healthy, and liquidity is available. Yet investment appetite remains subdued because of structural issues like political instability, slow government spending, and weak investor confidence.

That said, I do see early signs of improvement. Lower interest rates are beginning to restore public and business confidence. Rising remittances provide a safety net and fresh investment capacity for households. And if government capital expenditure continues to improve, it will act as the essential boost for private sector activity.

From Nabil’s side, we are ready to finance strong, bankable projects. With stable policies and timely execution, I believe Nepal is on a path toward gradual but meaningful economic recovery. The road ahead may be challenging, but the lights are definitely there.