Even though the demand for loans continues to rise, the interest rates of banks will not increase for the last month of the second quarter.
The Nepal Bankers Association has coordinated with the banks not to raise interest rates next month.
Since the beginning of the current fiscal year, there has been a shortage of money to invest in the bank.
Deposits in banks have not been able to sustain the growing demand for loans. As a result, banks are constantly raising interest rates. However, interest rates will not increase for the month of December.
Nepal Rastra Bank (NRB) has introduced a quarterly review of the current fiscal year to increase and decrease the interest rate before the start of any month.
There are only three days left until the beginning on last month of second quarter. The association is discussing in favor of not raising interest rates in coordination with the banks before the banks issue the notice.
According to Nepal Bankers Association president Anil Kumar Upadhyaya, discussions are underway to not raise interest rates next month.
“Commercial banks have agreed not to raise interest rates,” he said. The same issue is being discussed with development banks and microfinance companies.
According to the union, interest rates have continued to rise while deposit collection has continued to decline. The association has also made public the statistics of deposits and loans of commercial banks.
The 27 commercial banks had collected Rs 42.33 trillion in deposits in mid-November last year. By Monday, it had dropped by Rs 12 billion to Rs 42.21 trillion.
But credit flows have increased. According to the association, the banks disbursed Rs 4,034 billion in mid-November, an increase of Rs 42 billion to Rs 4,077 billion as of Monday.
According to the Banks Association, credit to banks has not been extended as per the demand.
Government money has not been able to enter the banking system due to weak budget expenditure in the current fiscal year. That is why liquidity is not enough.
The government has spent only 22.96 percent of the total budget. Even in that, development expenditure is very weak. Development expenditure is now only 6.22 percent.
In terms of numbers, the government’s revenue so far in the current fiscal year has been Rs 433 billion while the expenditure has been only Rs 374 billion. The government has set a target of spending Rs 1.632 trillion by mid-July.