BFIs extended loans worth Rs 111.39 billion in between mid-July 2012 and mid-March, the latest report of Nepal Rastra Bank shows. With this, total loan disbursements of BFIs reached Rs 901.85 billion till mid-March.[break]
Of the total loans disbursed in the eight-month period, wholesale and retail sector received the biggest chunk of credit amounting to Rs 26.85 billion, or 24.12 percent of the total loans extended by BFIs. The credit obtained by the sector was 16.6 percent higher than in mid-July 2012. Most of this money was used to finance imports of consumable goods.
Next in the list is the productions sector which absorbed Rs 23.82 billion in loans, or 21.39 percent of the total credit extended by banks and financial institutions in the review period. The amount received by the sector was 15.2 percent higher than in mid-July 2012. Most of this money went to iron and steel plants, cement factories, units that produce beer, alcohol and soda, and food packaging and processing units, the report shows.
Similarly, agriculture sector received Rs 8.89 billion in BFI loans, up 30.9 percent than in mid-July 2012, while service industries absorbed credit of Rs 8.07 billion from banks and financial institutions, a rise of 13.5 percent than in mid-July 2012.
The only sector that saw reduction in lending was transportation equipment production and fitting in which credit flow declined by Rs 11.1 million to Rs 17.48 billion till mid-March.
“Credit flow has remained robust so far this fiscal year than in the same period last fiscal year because of reduction in lending rates,” Anal Bhattarai, CEO of Commerz and Trust Bank, told Republica.
In the same period last fiscal year, BFIs had extended credit of Rs 40.31 billion.
“But with the portion of excess liquidity declining due to reduction in government spending, deposit rates as well as lending rates might go up in the coming days,” Bhattarai said, adding: “Rise in deposit rates will benefit depositors but hike in lending rates might create inflationary pressure as most of the bank loans are being used to finance imports for consumption purpose these days.”
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