Private sector credit from BFIs declines

By A Staff Reporter,Kathmandu, Apr. 15: Growth rate of private sector credit from the banks and financial institutions has significantly fallen during the first eight months of the current fiscal year 2022/23.

Private sector credit from the banks and financial institutions has increased only by 2.8 per cent to Rs.128.18 billion in the review period compared to an increase of Rs. 522.49 billion (12.8 per cent) in the corresponding period the previous year. 

On y-o-y basis, credit to the private sector from BFIs increased by 3.1 per cent in mid-March 2023, according to a macroeconomic and financial report of the Nepal Rastra Bank (NRB).

Shares of private sector credit from the BFIs to the non-financial corporation and household stood at 64.6 per cent and 35.4 per cent respectively in mid-March 2023. Such shares were 63.7 per cent and 36.3 per cent a year ago.

During the review period, private sector credit from the commercial banks, development banks and finance companies increased only by 2.8 per cent, 3.1 per cent and 0.7 per cent respectively.

Of the total outstanding credit of the BFIs during the review period, 67.5 per cent is against the collateral of land and building and 12.2 per cent against the collateral of current assets (such as agricultural and non-agricultural products). 

Such ratios were 67.0 per cent and 12.5 per  cent respectively a year ago.

In the review period, outstanding loan of BFIs to the agricultural sector increased by 5.9 per cent, industrial production sector by 7.3 per cent, construction sector by 5.9 per cent, transportation, communication and public sector by 10.1 per cent, wholesale and retail trade sector by 3 per cent, service industry sector by 5.9 per cent and consumable sector by 1.6 per cent.

In the review period, term loan extended by the BFIs increased by 14.0 per cent, demand and working capital loan by 1.9 per cent, real estate loan (including residential personal home loan) by 2.6 per cent and trust receipt (import) loan by 3.1 per cent whereas overdraft loan decreased by 64.5 per cent (mainly due to reclassification of loan from the recent year), margin nature loan fell by 6.6 per cent and hire purchase loan decreased by 11.2 per cent.

Deposit collection increases

However, the growth rate of deposits collection at BFIs  has increased during the review period.

Deposit of the BFIs increased by Rs. 280.57 billion (5.5 per cent) in the review period compared to an increase of Rs.192.12 billion (4.1 per cent) in the corresponding period the previous year. 

On y-o-y basis, deposits at the BFIs expanded by 10.5 per cent in mid-March 2023.

The share of demand, saving, and fixed deposits in total deposits stands at 7.9 per cent, 25.7 per cent and 59.9 per cent respectively in mid-March 2023. Such shares were 8.4 per cent, 29.2 per cent and 55.5 per cent respectively a year ago.

The share of institutional deposits in total deposit of the BFIs stands at 36.8 per cent in mid-March 2023. Such share was 38.8 per cent in mid-March 2022. 

NRB injected liquidity of Rs. 3,697 billion

In the review period, the NRB injected Rs. 3697.28 billion liquidity through various instruments. Of that, Rs. 377.27 billion was injected through repo, Rs. 83.85 billion through the outright purchase auction, Rs. 2720.49 billion through standing liquidity facility (SLF) and Rs.515.67 billion through Overnight Liquidity Facility (OLF). 

During the period, the NRB absorbed Rs. 5 billion liquidity through reverse repo auction.  In the corresponding period the previous year, Rs. 5010.76 billion net amount of liquidity was injected through various instruments.

In the review period, the NRB injected liquidity of Rs. 482.53 billion through the net purchase of USD 3.70 billion from foreign exchange market. 

Liquidity of Rs. 147.14 billion was injected through the net purchase of USD 1.22 million in the corresponding period the previous year.

In the review period, the NRB injected liquidity of Rs. 482.53 billion through the net purchase of USD 3.70 billion from foreign exchange market. 

Liquidity of Rs. 147.14 billion was injected through the net purchase of USD 1.22 million in the corresponding period the previous year.