Banks’ deposits collection plunged further last month amid surging loan issuance

Published On: November 21, 2021 07:15 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Nov 21: The deposits collection by commercial banks declined by Rs 36 billion whereas the loan issuance increased by equivalent amounts in the one month period from mid-October to mid-November. 

According to Nepal Bankers’ Association (NBA), the banks’ deposits declined from Rs 4.269 trillion to Rs 4.233 trillion over the period. Similarly, the loan amount increased from Rs 3.998 trillion to Rs 4.034 trillion. 

Currently, Nepal’s banking sector has been reeling under an acute shortage of loanable funds due to excessive issuance of loans and slow deposits collection. According to Nepal Rastra Bank, due to this reason, the credit-deposit ratio of most of the banks has now crossed the given limit of 90 percent. 

While the banks have been looking to raise their interest rates, Nepal Rastra Bank has directly intervened, preventing the banks from taking such moves. Analysts have heavily criticized the central bank’s move stating the regulator fixing the interest rates will make Nepal’s banking sector lose trust of the international financial market.  


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