KATHMANDU: The credit-to-deposit ratio (CD ratio) in Nepal’s banks has shown the optimistic sign and has come to 90.54 percent from last months 92 percent. With the positive gesture in the CD ratio, the deposits in commercial banks have also increased.

According to Nepal Rastra Bank (NRB), the CD ratio of the banking sector stood at 90.54 percent in the the first week of January. However, commercial banks have the ratio as 91.02 percent.

According to the Nepal Bankers Association, commercial banks have collected a total of Rs 42.49 trillion in deposits till the first week of January. Deposits of banks have increased by Rs. 12 billion as compared to last month. Banks had collected a total of Rs 42.37 trillion in deposits till mid-December last year.

Similarly, credit investment of banks has also increased by Rs. 15 billion. Banks that had invested Rs 4,084 billion in loans till mid-December have invested a total of Rs 4,099 billion in loans till the first week of January.

Many people think NRB decision to repeal the provision of capital-loan-to-deposit ratio (CCD) and introduced CD ratio system, the banks faced the liquidity crisis. NRB decision aggravated the banks situation making them unable to invest in loans. However, NRB has been saying that the provision did not impact liquidity.

NRB argues that without the CD ratio, there would have been more problems in the banking system. NRB has directed the commercial banks to bring the CD ratio within 90 percent by mid-July 2022.