Liquidity shortage worsens: Deposits decreases abnormally

Rs 116 billion decreases from banking system in three weeks


August 10, 2022


Liquidity shortage worsens: Deposits decreases abnormally

Image for Representation. (alamy.com)

KATHMANDU: Deposits in the banking system have started to decrease unnaturally in the first three weeks of the fiscal year 2022/23. In the three weeks of Shrawan, deposits from the banking system have decreased by 116 billion rupees.

According to Rastra Bank, there were 5.153trillion rupees of deposits in the banking system on July 16, but by August 8, it has decreased by 116 billion rupees to 5.037 trillion rupees.

As of July 16, the loan amounting to 4.704 trillion rupees has decreased by 8 billion rupees to 4.692 trillion rupees by August 8. As deposits have decreased by about 10 times compared to loans, banks have experienced more liquidity (investable capital) crisis.

On average, the CD ratio of the banking system has reached 87.86 percent. According to the rules of the Central Bank, such a ratio should be less than 90 percent.

Although experts think it natural to experience the decrease in deposits in Shrawan (mid-July to mid-August), they take the alarming decrease as something unusual.

The banking system had experienced the decrease of 72 billion in the first month of last fiscal year (2021/22).

During Shrawan of the last financial year, 72 billion rupees of deposits were reduced from the banking system.