After a deposit growth spurt towards the end of the last fiscal year, commercial banks are again facing scarcity of fresh deposits in current fiscal year 2022-23.
As per the latest data provided by the Nepal Bankers’ Association (NBA) – the umbrella organisation of commercial banks in the country – the total deposits of commercial banks plunged sharply by Rs 95 billion between July 16 and August 5 to Rs 4.446 trillion creating scarcity.
The week-on-week deposit growth has also decreased since the fiscal year began – by Rs 63 billion in the week ending July 22, by Rs 28 billion in the week ending July 29 and by four billion rupees in the week ending August 5.
At the end of the previous fiscal year, the total deposit of commercial banks had reached Rs 4.541 trillion.
The Monetary Policy for the fiscal 2022-23 has primarily focused on controlling credit flow by lowering credit expansion to 12 per cent compared to 19 per cent in the last financial year.
Moreover, through the previous Monetary Policy, NRB had replaced the provision of credit to core-capital plus deposit (CCD) ratio with a maximum limit of 85 per cent by CD ratio with a ceiling at 90 per cent.
The target had to be achieved by the end of previous fiscal, or mid-July.
As a result, banks have tightened disbursement of loanable funds. This is evident through the NBA data, which show credit flow of commercial banks over the review period fell by nine billion rupees. The total loan disbursement had reached Rs 4.175 trillion in the review period against Rs 4.166 trillion till August 5.
As per NRB, the average CD ratio within three weeks was 87.69 per cent.
The week-on-week analysis of the lending figures reveals that total lending had contracted by Rs 10 billion in the week ending July 22, and by one billion rupees in the week ending July 29. However, in the week ending August 5, the total lending increased by two billion rupees.
