Contemporary Banking Issues: RBB Syllabus Unit Simple

"Contemporary Banking Issues" is a unit in the RBB Level 6 syllabus that asks about real problems banks face right now not old theory. Let's go through each issue with real, current Nepal numbers so you actually understand what's happening.

Quick Answer

This unit appears in the RBB Level 6 syllabus under "Contemporary Banking Issues." It covers five real, current problems in banking: Liquidity Position (excess or shortage), Interest Rate Fluctuations, Composition of Deposit Structure, Loan Rescheduling/Restructuring/Ever-greening, and Management of Non-Performing Loans (NPLs). Unlike some other units that test fixed definitions, this one rewards understanding what is actually happening in Nepal's banking sector right now so real numbers matter here.

1. Liquidity Position: Excess or Shortage

Liquidity means how much easily-usable cash and cash-like funds a bank has on hand. Nepal's banking sector has swung between two problems in recent years:

Excess liquidity: when banks collect more in deposits than they can profitably lend out. This has been a recurring issue in Nepal, especially when loan demand is weak.
Liquidity shortage: when banks don't have enough cash to meet withdrawal demands or new loan requests, often during periods of high loan demand or slow deposit growth.

As of early 2026, Nepal's Credit-to-Deposit (CD) Ratio stood at about 74.32%, well below the regulatory ceiling of 90%. In simple words: this means banks currently have significant room to lend more before hitting their limit a sign of excess liquidity in the system, not a shortage.

2. Interest Rate Fluctuations

Interest rates in Nepal change based on Nepal Rastra Bank's monetary policy and overall market conditions. As of early 2026:

Policy repo rate: 4.25%
Bank rate: 5.75%
Average lending rate: 7.00%
Average deposit rate: 3.51%
Interest spread (the gap between lending and deposit rates): 3.49%, across 54 banks and financial institutions

Why this matters: when interest rates change, it affects how much people pay on loans and how much they earn on deposits which in turn affects how much people borrow, save, and spend across the whole economy.

3. Composition of Deposit Structure

This refers to what kinds of deposits a bank holds savings accounts, fixed deposits, current accounts, and so on and in what proportions. A bank's deposit mix matters because different deposit types behave differently:

Savings and current accounts can be withdrawn anytime, so they're less stable but usually cheaper for the bank.
Fixed deposits are locked in for a set period, so they're more stable but usually cost the bank more in interest.

As of early 2026, some banks were offering fixed deposit rates as high as 10.25% (Mega Bank Nepal) and 10.00% (Sanima Bank) for one-year deposits, showing how banks compete for stable, long-term deposits when they need them.

4. Loan Rescheduling, Restructuring, and Ever-greening

We covered rescheduling and restructuring in our earlier Key Banking Terminology deep dive. Ever-greening is the more concerning term in this list. It means a bank keeps a bad loan looking "healthy" on paper for example, by giving a struggling borrower a new loan specifically to repay the old one, without the borrower's actual ability to repay ever improving. This hides the real problem instead of solving it. Regulators watch closely for ever-greening because it can make a bank's loan book look much healthier than it actually is.

5. Management of Non-Performing Loans (NPLs)

An NPL is a loan where the borrower has stopped making payments as agreed essentially, a loan that has "gone bad." This is one of the most closely watched numbers in banking.

Real, current Nepal figures (as of Ashwin end, fiscal year 2082/83):

The average NPL across 20 commercial banks rose to 4.86%, up from 4.04% a year earlier a clear worsening trend.
Everest Bank had the lowest NPL among commercial banks, at just 0.74%.
Himalayan Bank and NIC Asia Bank had the highest NPLs, at 7.39% and 6.99% respectively.
Only one bank out of 20 had an NPL below 1%; the rest ranged between 1% and 8%.

Why rising NPLs matter: when more loans go bad, banks must set aside more money as loan loss provisions (which we covered in our terminology deep dive), which directly reduces their profits. A rising NPL trend across the sector, like the one seen in Nepal from FY 2081/82 to 2082/83, is a genuine warning sign economists and regulators watch closely.

Why This Unit Matters for Your Exam

Unlike a purely definition-based unit, "Contemporary Banking Issues" often shows up as long-answer or analytical questions at Level 6 for example, "Discuss the current NPL situation in Nepal's banking sector" or "What factors affect liquidity in Nepal's banks?" Having real, specific numbers ready not just general statements is exactly what separates a strong Level 6 answer from a weak one, since this level's exam has no MCQs to fall back on.

What Should You Do With This Information

Remember the current CD Ratio (about 74%) versus the 90% ceiling this tells you Nepal currently has excess liquidity, not a shortage.
Remember the NPL trend — average NPL rose from 4.04% to 4.86% year-on-year and be ready to explain this is a worsening, not improving, trend.
Understand ever-greening as a "hidden problem" concept, distinct from honest rescheduling or restructuring.
Connect deposit structure to interest rates higher fixed deposit rates show banks actively competing for stable funding.
Keep these figures updated over time. Banking numbers like NPL and CD ratio change every quarter. Loksewa AI's study planner can help you schedule a periodic check for the latest figures before your exam.

Final Thought

This unit is different from most others in the syllabus because it's not about memorizing a fixed definition it's about understanding a living, changing situation in Nepal's banking sector. Learn the current numbers, understand what direction they're moving in, and practice explaining the "why" behind each trend. That combination is what a strong Level 6 answer actually needs.