May 20: Credit given by Banks and Financial Institutions (BFIs) to the private sector is much more than deposit collection in the first nine months of the current fiscal year, according to a report prepared by the Nepal Rastra Bank.
The central bank’s report on the Current Macroeconomic and Financial Situation of Nepal shows that deposits at BFIs increased 10.6 percent in the review period compared to a growth of 10.1 percent in the corresponding period of the previous year while the credit to the private sector from BFIs increased 16.5 percent compared to an increase of 16.9 percent in the corresponding period of the previous year.
However, on the y-o-y basis, deposits at BFIs expanded 19.8 percent in mid-April 2019 while the credit to the private sector from BFIs increased 22.1 percent.
BFI’s lending has surpassed deposit collection in the last few years, informed Dr Gunakar Bhatta, executive director at the research department of NRB. He, however, said that it is quite normal for the demand of loan to increase in a vibrant economy.
He argued that increase in loans would also help in economic growth.
“One of the reasons for the growing demand for loans is that the BFIs have expanded their networks in the rural areas of late,” he added.