Is more credit really the answer?

The real danger today is not the credit slowdown but the urge to reverse it at any cost.

Banks are liquid, interest rates are low, and yet credit uptake remains weak. Policymakers are searching for ways to increase lending. From the local tea shops to the boardrooms of banks, the question is the same: Why aren’t people borrowing? The conventional answer is ‘economic distress’. But as economists, we must ask a more uncomfortable question: What if low credit uptake is not a failure but a correction? What if this slump is signalling something deeper about the structure of Nepal’s economy?