The extension of loans of the commercial banks has been rising amid the tepid deposits over the past few weeks.
The commercial banks’ data provided by the Nepal Bankers Association (NBA) showed that lending rose by thumping Rs. 27 billion from the end of Aswin (October 17) to the second week of Kartik (November 3). Meanwhile, deposits sild down by Rs. 31 billion in the same span of time.
The data showed that lending on October 17th recorded Rs. 3998 billion which rose to Rs. 4025 on the 3rd of November. In sharp contrast, the deposits have turned down during this period. According to the data, the deposit accounted for Rs. 4269 billion on October 17th tumbled down to Rs. 4238 on November 3.
Bankers have been expressing discontent over the current volatility in the financial market. To ease the stress, Nepal Rastra Bank (NRB) has been resorting to the instruments available for the open market operation intermittently.
To address liquidity stress, NRB has also allowed the BFIs to change the interest rate on all forms of deposits by around 10 per cent point on the previous month deposit and directed that institutional depositors get 1 percentage point less interest rate than the deposits of the public.
In parallel, NRB has been injecting liquidity through frequent bidding of the repo. The data showed that just in the month of Kartik, (mid-October to the second week of November), NRB injected the repo of Rs. 50 billion in the banking system. However, the financial stress has yet not relaxed.
Source : TRN,
