Excess Liquidity Dips As SLF Matures

Notwithstanding the pilling up of deposits, excess liquidity in the Nepal Rastra Bank has reduced as compared to the review period of the last month. The excess liquidity recorded on August 31 was Rs. 18 billion down from Rs. 37.79 billion on July 31 this year.

As economic activities went up, deposit increased by Rs. 230 billion in the span of mid-June and mid-July. Monthly statistics of the NRB released in July end showed that aggregate deposits in the banks and financial institutions (BFIs) in mid-July was Rs. 4740 billion up from Rs. 4510 in mid-June.

The rise in deposits was just Rs. 36 billion in the monthly review period of mid-June. The statistics showed that aggregate deposits in mid-June were Rs. 4510 billion up from Rs. 4474 of mid-May.

Nonetheless, lending of the BFIs over the last few weeks also gained momentum. The statistics of the NRB showed that loans edged up by Rs. 66 billion from mid-June and to mid-July.

The Nepal Bankers Association data also showed lending of commercial banks rising by Rs. 59 billion from mid-July to August 20.

Spokesperson of the NRB Dev Kumar Dhakal said the excess liquidity on August 31 was Rs. 18 billion. However, he said that the main cause of reduction in excess liquidity is the maturity of the standing liquidity facility (SLF) taken by banks and financial institutions.

The BFIs had taken the SLF facility from the NRB to inject liquidity when the amount of deposit was low.

Source : TRN,