KATHMANDU, Dec 15: As the overall demand for private sector loans has declined, banks have shown keen interest to provide more loans to shares and automobiles.
The records with Nepal Rastra Bank (NRB) show that the disbursement of private sector loans by commercial banks went down 0.14 percent in one month between mid-October and mid-November. As of the first three months of the current fiscal year, the total loans disbursed by commercial banks stood at Rs 5.287 trillion, which fell to Rs 5.280 trillion by mid-November.
On the other hand, the banks increased their lending on purchase of automobiles by Rs 1.77 billion. As of mid-October, the lending under hire-purchase of banks stood at Rs 124.94 billion, which rose to Rs 126.71 billion by mid-November.
Lending slows as banks focus on recovery of loans at fiscal yea...
According to bankers, the demand for loans to purchase electric vehicles (EVs) has surged in recent times. Santosh Koirala, chief executive officer of Machhapuchchhre Bank, said the loan issuance for the purchase of EVs soared during the festive season.
Citing excessive loanable funds with them, banks have started offering the auto loans at an interest rate as low as 7.5 percent per annum. This has also helped boost the demand for loans in this segment.
The records with the Department of Customs show that the country imported 3,487 units of EVs worth more than Rs 8.37 billion in the first four months of the current FY. In the fourth month alone, a total of 969 units of EVs were imported.
Likewise, the banks’ loans against shares increased to Rs 107.76 billion in the review month from Rs 105.82 billion as of mid-October. It shows that banks provided additional credit of Rs 1.94 billion to purchase shares in mid-October to mid-November.
The NRB has adopted flexibility in share-mortgage loans through the monetary policy of the current fiscal year. After the NRB removed the cap of Rs 200 million on share collateral loans to institutional investors, banks have seen an increase in loan investment under the heading. Commercial banks can invest 40 percent of their primary capital on share-mortgage loans.
Bankers said the loan demand for hydropower projects has also started to increase slowly. Likewise, the demand for loans is expected to grow in the construction sector from next month.
Meanwhile, the overall private sector credit of the banks and financial institutions increased just 2.5 percent in the first four months. The central bank has targeted to increase private sector lending by 12.5 percent this year.
