With this jump, total loans extended by banks and financial institutions till mid-May stood at Rs 924.77 billion as against Rs 790.47 billion recorded in mid-July last year. Of this amount, credit of Rs 134.31 billion was issued in 10-month period between mid-July and mid-May.
“Credit flow has gone up so far this year because of slight reduction in lending rates,” Anal Bhattarai, CEO of Commerz and Trust Bank, told Republica. “However, loan extension has fallen since mid-April due to tight credit to core-capital-cum-deposit (CCD) ratio maintained by many banks and financial institutions.”
The latest report of Nepal Rastra Bank (NRB), the central bank, shows wholesale and retail sector taking the lead in loan consumption. The sector absorbed Rs 31.89 billion of loans extended by banks and financial institutions, or 23.74 percent of the total loan extended by banking institutions in the 10-month period. Most of the amount was used in imports of goods ranging from cars, televisions and refrigerators to clothes and toys.
Next in line was productions sector, which secured Rs 26.84 billion worth of loans in the 10-month period. This is around 20 percent of the total loans extended by banks and financial institutions between mid-July and mid-May. Most of this money was consumed by iron and steel plants, cement factories, units that produce beer, alcohol and soda, and food packaging and processing units, the NRB report shows.
Construction sector also seems to have performed well, absorbing Rs 11.03 billion, or 8.2 percent of the total loans, during the review period. “Construction sector seems to be doing well lately due to slight increment in government´s capital expenditure,” Bhattarai said.
Among others, services sector secured Rs 9.87 billion in the 10-month period, while agriculture sector absorbed credit of Rs 8.83 billion during the review period. Likewise, transportation, communications and public services sector received Rs 6.66 billion in credit from banks and financial institutions, while mining sector secured Rs 1.33 billion in loans in the 10-month period.
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