NRB urges BFIs to increase deposit collection

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January 19: Nepal Rastra Bank has been urging banks and financial institutions to step up efforts in collecting deposits in order to maintain smooth flow of loan. However, there hasn’t been any improvement in the situation.

A report prepared by central bank states that deposit collection has decreased in the first five months of the current fiscal year as compared to the corresponding period of the last FY.

Deposit collection had increased by 5.7 percent during the review period last year but this year it has increased by only 4.4 percent.

Of late, the rate of deposit collection has deceased while the flow of loan has increased.

The flow of loan to the private sector has increased by 7.6 percent during the review period this year. However, the flow of loan during the corresponding period of last FY was 9.6 percent. Although there has been a decrease in percentage of flow of loan, the overall amount of loan flow has increased. 

According to NRB, the increase in flow of loan without considering the capital-cum-deposit (CCD) ratio of 80 percent set by the central bank would trigger liquidity crunch.

Nara Bahadur Thapa, executive director of the research wing of NRB, said that the major source of loan flow is deposit so the BFI’s should focus on deposit collection.

 

 

 

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