KATHMANDU: Money pouring into banks and financial institutions continues its upward trend. Concurrently, the Credit-Deposit Ratio (CD Ratio) has peaked at 79 percent, marking a substantial increase over a notable period.
Financial entities are mandated to maintain the CD Ratio below 90 percent. However, owing to the recent surge in capital influx, the CD Ratio stands at 79.89 percent.
According to the Nepal Rastra Bank (NRB), this data is reflective of figures from two days prior. Until December 16, the total deposits have surpassed NPR 6 trillion 16 billion. Notably, a significant single-day deposit increase of NPR 60 billion has been observed, considering that the total deposits on December 15 were NPR 6 trillion 10 billion.
Specifically within commercial banks, there has been a surge in deposits, amounting to NPR 5 trillion 323 billion. A comparison with the previous day reveals an additional deposit of NPR 5 billion in commercial banks.
In contrast, other banks and financial institutions have experienced an increment of NPR 3 billion in deposits within 24 hours. This suggests that lending has only risen by NPR 1 billion during the same period.
As of December 16, the interbank interest rate remains stable at 2.72 percent.
The recent surge in liquidity has prompted the Central Bank to intervene through various mechanisms to regulate deposit levels. Banks are compelled to invest in very short-term instruments to generate returns. The aggressive stance of investors, expecting single-digit interest rates, has resulted in reduced borrowing, influencing the inflow of deposits and contributing to the liquidity surge.
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