Interest On Credit Slips As Volume Of Credit Flow Shrinks

As the out-flow of credit in the market slowed corresponding to the in-flow of deposits, the credit rate slightly declined.

The monthly deposits significantly sprung from Rs. 9 billion to Rs. 36 billion while the credit dived from Rs. 44 billion to Rs. 40 billion.

The monthly “Banking and Financial Statistics” released by Nepal Rastra Bank on July 5 revealed that the deposit in banks rose to Rs 36 billion in a period of a month, from mid-May to mid- June, while it was Rs. 9 billion for the previous month, from mid-April to mid-May.

However, the credit flow decreased by Rs. 4 billion in the month compared to the previous month. Credit flow was Rs. 40 billion between mid-May and mid-June while it was Rs. 44 billion in the previous period of mid-April and mid-May.

The slowdown in credit flow has consequently pulled the interest on credit down. The weighted average interest on credit recorded in mid-June is 8.46 percent which is down from 8.53 percent recorded in mid-May.

Also, the weighted average interest on deposits in mid-June fell to 4.72 percent from 4.81 percent in mid-May as the volume of deposits rises.

With this, the total deposit rose to Rs. 4,510 billion in mid-June from Rs 4,474 till mid-May. Similarly, the flow of credit in the market which was Rs. 4069 billion in mid-May has now risen to Rs 4109 by mid-June.

Source : TRN,