Bank investment declines as COVID pandemic continues to drag on

Published On: June 9, 2021 09:15 AM NPT By: Republica | @RepublicaNepal

KATHMANDU, June 9: The second wave of COVID pandemic has affected the credit investment of banks. Although during the onset of the second wave of the pandemic it did not seem to have much effect, the problem has started to become visible in recent days.

According to the Nepal Bankers Association, only Rs 8 billion has been invested till the first week of June when a total of Rs 13 billion deposit had been collected. Earlier, the situation of deposit and loan investment was similar and sometimes the investment used to be much higher. Bankers estimate that credit investment has slowed down as investors have remained idle due to the pandemic.

"Investors are less interested in borrowing at this time," said a banker. "Perhaps the pandemic may have disappointed investors." The bank's investment, which had slowed down due to the first wave of COVID, had increased significantly since October. But the bank's investment slowed again in the second month since the second wave of COVID began.

With the issuance of the prohibitory order, credit investment has started declining, but only about half of the deposits have been invested in the last few weeks. Bankers point out that the investment has declined even if banks have neglected deposits. "We decided to stop taking less than Rs 50,000 in deposits," the banker said. "Even in such a situation, Rs 13 billion has been collected."

During the time period of a month( mid-April to mid-May), banks have collected only Rs 32 billion in deposits. Banks had collected Rs 83 billion in deposits between mid-March and mid-April while Rs 138 billion was dispersed as loans.

After collecting Rs 13 billion in deposits in the last one week, the deposits of all banks have reached Rs 3.969 trillion so far. Similarly, the investment of banks has reached Rs 3.634 trillion so far after the increase in credit by Rs 8 billion. Bankers say that most of the credit sectors have slowed down due to the closure. At the same time, loans for real estate and vehicles have also slowed down, according to bankers.