Banks and financial institutions extended Rs 99.31 billion in loans in the seven-month period to February 11, the latest report of Nepal Rastra Bank, the central monetary authority, shows. [break]
With the extension of this credit, total loans extended by banks and financial institutions reached Rs 889.78 billion as of February 11, as against Rs 790.47 billion recorded in mid-July.
“Lending of banks and financial institutions went up in the period as credit rates fell due to excess liquidity, especially in initial months of the current fiscal year,” said Rajan Singh Bhandari, CEO of Citizens Bank International and president of Nepal Bankers´ Association.
But with the tightening of liquidity in recent days, lending rates are again expected to go up, which will reduce demand for loans in the coming days.
In the first seven months of 2012/13, production sector absorbed the highest amount of credit, with the figure standing at Rs 23.78 billion, up 15.1 percent from mid-July, the central bank report shows.
Wholesale and retail was the second largest sector to soak up credit of banks and financial institutions. The sector received Rs 22.92 billion in loans in the seven-month period, a rise of 14.2 percent than in mid-July.
Agriculture sector became the third largest sector to absorb credit in the first seven months of the current fiscal year. It received Rs 8.27 billion in loans from banks and financial institutions in the period -- up 28.7 percent than in mid-July -- of which Rs 6.84 billion went to livestock sector.
Lending to agriculture sector has been rising after the central bank last year instructed banks and financial institutions to extend at least 10 percent of total loans to agriculture and hydropower sectors.
Among others, service industries like tourism, hotel and education sectors, among others, received Rs 7 billion in loans from banks and financial institutions, while construction sector obtained Rs 6.23 billion in credit in the review period.
The central bank report shows banks and financial institutions also extended Rs 5.26 billion in consumable loans in the period, up 15.1 percent than in mid-July, while mining sector received Rs 1.50 billion in loans, a rise of 55.5 percent than in mid-July.
Related story
Lending slows as banks focus on recovery of loans at fiscal yea...
