Deposit Collection of Banks Increases by Rs 94 Billion in 24 Days

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Deposit Collection of Banks Increases by Rs 94 Billion in 24 Days

July 13: Deposit collection of commercial banks between mid-June to mid-July in the current fiscal year stood almost at Rs 100 billion. The increase in deposit collection has been attributed to the increase in government expenditure since mid-June. With the increase in deposit collection, the credit-to-deposit ratio (CD ratio) of banks has improved since the last month.

According to the Nepal Bankers Association, the total deposits of commercial banks has reached Rs 4.494 trillion by July 8. Earlier, the deposit collection of banks was Rs 4.4 trillion by mid-June. The deposit increased by Rs 94 billion in just 24 days.

Despite the increase in total deposits of banks, foreign exchange reserves however, showed a slump. Commercial banks had foreign exchange reserves of Rs 111 billion as of mid-June, but it fell to Rs 106 billion on July 8.

As per the Nepal Bankers Association, deposits in Nepali currency increased from Rs 4.290 trillion to Rs 4.387 trillion. Deposits of banks in the last one week increased by Rs 62 billion.

Government spending increased since mid-June as the fiscal year drew towards its end. According to records maintained by the Financial Comptroller General’s Office, the government spent Rs 6.51 billion on Monday alone. On Saturday, the government’s spending stood at Rs 25.55 billion. About Rs 200 billion has been spent from the state coffers between mid-June to mid-July June alone.

Bankers had kept complaining that there was a lack of liquidity in banks and financial institutions due to the government's inability to spend the budget. However, despite the increase in deposit collection from mid-June to mid-July, commercial banks have reduced the credit flow. Banks reduced credit flow to maintain the CD ratio as per the provisions of the current fiscal year’s monetary policy.

According to the association, the credit flow of banks decreased by Rs 19 billion between mid-June to mid-July. The total credit of banks decreased from Rs 4.193 trillion to Rs 4.174 trillion by July 8. In the last week alone, the credit of banks declined by Rs 10 billion.

The banks have emphasized on loan recovery to maintain the CD ratio of 90 percent as specified by the central bank. According to the association, the average CD ratio of banks by July 8 is 88.57 percent. The average CD ratio of banks by mid-June last year was 90.15 percent.

According to NRB, the CD ratio of only four commercial banks is above 90 percent. By mid-May, the CD ratio of 15 banks was above 90 percent. Banks have tightened loans disbursement and emphasized on deposit collection and credit recovery to maintain the CD ratio as set by the NRB.



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