The central bank has reported that loan disbursement by banks and financial institutions in the current fiscal year’s first 11 months has increased by only 6.2 percent. By the end of the month of Jestha, total loan disbursement reached NPR 5.83 trillion. During this period, there has been a significant decline in both interest rates and base rates of banks.
Deposit mobilization rose by 10.3 percent, reaching NPR 8.01 trillion, adding further liquidity management challenges for banks and financial institutions.
Kathmandu, 29 Ashad – Data released by the central bank reveals that loan expansion by banks and financial institutions over the 11 months of the current fiscal year has been limited to 6.2 percent. Between Shrawan and Jestha, loans worth NPR 340 billion were extended.
This growth rate is slower than the previous year, which saw an 8 percent increase in loan disbursement over the same period.
By Jestha end, total loans disbursed by banks and financial institutions stood at NPR 5.83 trillion. Despite adequate liquidity and low interest rates, loan growth remains sluggish.
Interest rates have continued to decline. The average base rate of commercial banks fell to 4.88 percent this Jestha from 6.09 percent the previous year. Similarly, development banks’ average base rate dropped from 8.29 percent to 6.86 percent, and finance companies’ from 9.02 percent to 7.16 percent over the same period.
Likewise, the weighted average interest rates on loans have decreased significantly. For commercial banks, the weighted average interest rate declined from 7.99 percent to 6.64 percent; for development banks, from 9.40 percent to 7.71 percent; and for finance companies, from 10.22 percent to 8.90 percent.
Deposit mobilization by banks and financial institutions also increased by approximately 10.3 percent during the 11 months, with deposits rising by NPR 748 billion to reach a total of NPR 8.01 trillion as of Jestha end.
Compared to the previous year, deposit growth has outpaced loans. Last fiscal year, deposits grew by 8 percent during the same period. The higher increase in deposits relative to loans has created additional liquidity management challenges.
