Mega Bank had mobilized Rs 14.2 billion through the IPO, which was launched with the intention of raising Rs 699 million. As per an NRB provision, the amount raised through public floatation has to be locked in the central bank for a period of at least six working days to ascertain the money was collected for real by whoever launched the IPO.
“Adhering to this rule, we transferred the money to the central bank last Thursday,” Mega Bank CEO Anil Shah told Republica.
Following this, deposits at commercial banks dropped to around Rs 939 billion as of June 14, as against Rs 945 billion recorded on June 7.
“We hope the deposit level will go up once again at commercial banks after NRB releases the money on Thursday,” Shah said.
Although the release of funds by the central bank will push up deposit level at banks for now, the overall deposit growth trend at category ´A´ financial institutions has not been encouraging this year.
Data shows deposits of commercial banks so far have grown by nine percent since the beginning of this fiscal year in mid-July. The growth achieved so far falls short of the central bank´s deposit growth target of 13.1 percent.
Deposits have been growing rather slowly at commercial banks this year because of fall in government spending, according to bankers.
The government was able to spend only 53.86 percent of the annual budgetary allocation of Rs 404.82 billion till May 29, latest report of the Ministry of Finance shows.
Because of this, many banks were, and still are, trying to lure institutional depositors by extending annual interest rates of over 11 percent.
Lower growth rate of workers´ remittance also tapered deposit growth rate at banks.
Nepalis working abroad sent home Rs 342.65 billion in the first 10 months of the current fiscal year to mid-May, up 21.5 percent than in the same period last year. The growth rate achieved this year, however, is lower than growth rate of 36.5 percent recorded in the same period previous year.
Despite this situation, many bankers say that banks and financial institutions will be able to meet the central bank´s deposit growth rate target of 13.1 percent because of higher spending by the government in the recent days.
“Government spending generally shoots up in the last month of every fiscal year, while demand for loans peters out. We hope this will give a lift to deposits at banks and financial institutions,” Shah said.
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