Kathmandu: The growth rate of loans has been higher than the deposits of banks. In the first 10 months of the current fiscal year, the growth rate of loans has been higher than the growth rate of deposits of commercial banks. According to the latest data provided by the Nepal Bankers Association, from mid-Ashar to mid-Baishakh, the credit investment of commercial banks has increased by 7.44 percent, while the growth rate of deposits has been only 6.75 percent.

CD ratio down to 64.40 percent

By mid-Baishakh, the CD ratio of national commercial banks has fallen to 64.40 percent. The CD ratio of banks has reached a low point as the credit expansion of this bank has slowed down compared to the deposit collection. According to the provisions of Nepal Rastra Bank, the CD ratio of commercial banks can be maintained up to 90 percent. However, due to the increasing pressure of excess liquidity in recent times, the CD ratio has reached a low point. During this period, the average CD ratio of 20 commercial banks is 79.26 percent.

According to the central bank, the overall credit mobilization has improved due to the increase in goods imports during this period. The flow of credit towards imports has increased by the most by 60.59 percent. The increase in goods imports has benefited banks and financial institutions, which have been unable to expand credit for a long time and are facing the problem of excess liquidity (accumulation of investable capital). Along with the increase in the flow of credit taken by entrepreneurs while importing goods, the overall flow of credit by banks and financial institutions has expanded.

Companies in the service sector and industrial sector are those who take more import loans. In addition, banks have increased their investment in hydropower projects in recent days. Data has shown that credit flows in other sectors have also started to gradually increase. The credit flow of commercial banks has increased in the last 10 months.

According to the data of the Nepal Bankers Association, the credit flow of commercial banks has increased by 7.44 percent to Rs 4910 billion from Shrawan to mid-Baisakh of the current fiscal year 2081-82. Until mid-Ashar, commercial banks had disbursed loans of Rs 4570 billion. Meanwhile, deposit collection in the 8 months of the current fiscal year has increased by 6.75 percent to Rs 6143 billion. Until mid-Ashar, commercial banks had collected deposits of Rs 5754 billion.