This study aims at analyzing banking sector’s exposures to real estate. The specific objectives are to measure and classify the actual real estate financing undertaken by banks and financial institutions in Kathmandu Valley; to identify the real estate financing procedure by banks and financial institutions; and to assess the impact of policy changes on real estate financing in Nepal. This study has collected information from three different parties of the real estate sector; first, the banks and financial institutions (Group A); second, professional real estate developers (Group B); and third, individual buyers of real estate assets (Group C).