Commercial banks are overwhelmed with an increasing liquidity  

KATHMANDU, July 11: The interbank rate has come down to 1.36 percent, a heavy decline in the past few months, after the banks were overwhelmed with increasing liquidity.

According to Nepal Rastra Bank (NRB), commercial banks collected deposits of Rs 5.050 trillion as of Sunday. The banks witnessed a single day growth of Rs 20 billion in their deposit collection.  On the other hand, the commercial banks’ lending stood at 4.301 trillion.

Until last month, the interbank lending rate was 6.18 percent. Last March, the rate was more than eight percent, while it stood at around seven percent in the consecutive two months.

Bankers said they are now having excess liquidity due to low demand for loans amid rising deposits collection. With the ongoing recession, the demand for goods and services has gone down and it takes down the lending rate in the interbank transaction, according to a banker.

Due to the increase in liquidity, the credit-deposit ratio has also gone down sharply. The records with the NRB show that the ratio declined by 0.28 percentage point to 82.03 percent as of Sunday.      

 
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