KATHMANDU: Deposits in banks have started rising as interest rates have risen.
Banks, which have raised interest rates on deposits by 10 percent since February 13, have doubled their deposits over loans in the three weeks.
According to the Nepal Bankers Association (NBA), deposits of commercial banks have increased by Rs. 11 billion from February 26 to March 4.
NBA source said that the credit flow of banks has increased by only Rs 5 billion during this period. As of February 25, the deposits had increased by Rs 2 billion while credit flows had increased by Rs 10 billion. The total deposits of commercial banks have reached Rs4 trillion 324 billion. Similarly, credit investment has also reached Rs 4.17 trillion, according to the association.
While banks have collected Rs 110 billion in deposits till mid-February this year, credit flow has increased by Rs 434 billion. Compared to the increase in deposits, credit flow has been higher and most of the credit has gone to unproductive sectors including imports, leading to lack of liquidity in banks and financial institutions.
NRB has started tightening the import of gold and silver and other luxury items after the country’s balance of payments and foreign exchange reserves were affected due to high imports.
Comment