Commercial banks ’ credit disbursements have overtaken deposit mobilisation after the Constituent Assembly elections. In the period between November 22 and January 10, banks ’ lending grew Rs 17 billion, while deposits increased by Rs 14 billion, according to Nepal Bankers’ Association data. Bankers said the credit demand is gradually increasing, but is not “so encouraging”. “In the review period, payments were made through letters of credit (L/C), which contributed to lending growth,” said Himalayan Bank CEO Ashoke Rana. “We are also seeing gradual rise in the demand for loans for new projects too,” said Rana. Bankers say it is natural to see a rise in credit demand after Dashain and Tihar festivals. “But this year, as the country headed towards the election right after the festivals, the demand for loans took some time to pick up,” said NMB Bank CEO Upendra Poudel. He said the demand for loans is still remained “disappointing”, but he expected credit disbursements would increase due to the positive political momentum. While lending growth has remained largely steady, deposit mobilisation has shown a fluctuating trend after the CA election. After the election, lending reached Rs 806 billion as of January 10 with a steady growth, while deposit collection declined by Rs 4 billion to Rs 1,089 billion as of Jan 10 compared to a week ago. Bankers said as people pay taxes just before mid-January, deposits usually come down in that period. Taxpayers pay income tax based on the expected income in the sixth month, besides the payment of other types of taxes like value added tax. In the first half of the current fiscal year, banks ’ deposit mobilisation grew by Rs 72 billion, while lending grew by Rs 52 billion, according to NBA. Bankers said the banks are still facing surplus liquidity despite the late rise in lending. The Nepal Rastra Bank (NRB) has so far absorbed around Rs 140 billion in excess liquidity from the banking system and has announced conducting another reverse repo worth Rs 19.5 billion on Thursday. In the latest reverse repo conducted a week ago, the average interest rate was at 0.4 percent. The inter-banking lending rate has remained at as low as 0.2 percent, while the rate on treasury bills has remained at 1 percent. “This clearly suggests banks are over liquid and increasing lending is must,” said NMBs’ Poudel.
Posted on: Sun, 26 Jan 2014 04:30:01 +0000
Trending Topics
Recently Viewed Topics
© 2015