Slump in both deposits and loans reflect a collapse in the economic activities due to coronavirus, say bankers

KATHMANDU, Nov 4: Bank lending has remained sluggish as the private sector is shying away from starting any new business projects or expanding their operations amid a sharp spike in coronavirus cases.

According to the Nepal Bankers Association (NBA), the total outstanding loans of 27 commercial banks have fallen by Rs 15 billion in the last two weeks. The NBA figures show that the total bank lending dropped from Rs 3,023 billion on October 16 to Rs 3,020 billion on November 30.

Not only loans, bank deposits have also gone down in the same vein. Their total deposits fell to Rs 3,633 billion from Rs 3,654 billion during the same period, according to the NBA data.

The slump in the bank deposits and loans reflect a collapse in the economic activities due to COVID-19, say bankers.

Bankers also attribute the sluggishness in transactions to the festive season when many bank branches remain closed.  

While the lending had gone up slightly until mid October with the demands for letter of credits to finance imports of goods, their investments have dropped during and after Dashain festival.

According to bankers, the growth of deposits and loans tend to slow down immediately after they publish their quarterly results.

Many banks are now publishing their first quarterly results of the current fiscal year 2020/21. Analysts expect a slump in the profits as COVID-19 continues to batter businesses and economic activities.

 
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