Credit up by 13%, deposit by 5% during 9 months

By TRN Online, Kathmandu, April 29: The credit outflow of the commercial banks went up by 13.16 per cent while the deposit grew only by 5 per cent in the first 9 months of the current fiscal year (FY).

According to the data provided by Nepal Bankers Association, the total outstanding credit outflow crossed Rs 4,194 billion in mid-April 2022, up from Rs. 3,706 billion recorded in mid-July 2021.

However, the total rise in the deposit remained sluggish over the duration of the nine months, from mid-July to mid-April.

According to the data, the deposit increased only by 5 per cent during nine months, from mid-July to mid-March. The deposit of Rs. 4,194 billion recorded in mid-July rose to Rs. 4,367 billion.

Slowing deposits amid aggressive lending has been creating a liquidity shortage in the current fiscal year. According to the Current Macroeconomic and Financial Situation of eight months released by Nepal Rastra Bank, the private sector credit of commercial banks increased by 12.4 per cent in the review period of the first eight months of the current fiscal year (FY).

Due to the rapid outflow of credit in comparison to deposit mobilization, the interest rate started rising. The NRB report revealed that the average base rate of commercial banks stood at 8.98 per cent in the eight months of 2021/22 which remained 6.84 per cent a year ago. Similarly, the weighted average deposit rate increased to 6.93 per cent from 4.76 per cent a year ago and the weighted average lending rate up to 10.60 per cent from 8.73 per cent a year ago.