There is huge imbalance in deposit collection, credit mobilisation
Kathmandu, October 4
According to Nepal Bankers’ Association (NBA) – the umbrella network of class ‘A’ banks in the country – commercial banks have mobilised loans worth Rs 63 billion against deposit collection of Rs 32 billion in the first two months. Total loan mobilisation of commercial banks reached Rs 2,174 billion and deposit collection stood at Rs 2,502 billion till mid-September or till the first two months of this fiscal.
There is huge imbalance in deposit collection and credit mobilisation and the mismatch could add pressure on banks and financial institutions to maintain the credit to core capital cum deposit ratio. Banks can lend up to 80 per cent of the deposit and core capital and Nepal Rastra Bank (NRB) can penalise them if they breach that regulatory requirement.
Bhuvan Kumar Dahal, CEO of Sanima Bank, has said that banks have to put in more effort to collect deposits.
Some of the banks have started raising the fixed deposit and general savings rate at the same range of the previous fiscal. Banks have raised the one-year fixed deposit rate to up to 10.5 per cent and savings rate to seven per cent. A few commercial banks, namely Mega Bank, Civil Bank and Machhapuchchhre Bank, among others, have already published a notice offering the new interest rate on deposits.
The high cost of deposit collection ultimately affects the lending rate and the lending rate could go up in the second quarter too. Though the central bank’s new rule allows the banks to bring down the lending rate any time, banks normally publish the base rate every quarter of the fiscal.
In the beginning of this fiscal, the central bank and bankers’ had said that the lending rates would come down from the end of the first quarter of this fiscal, however, the situation is different. The lending rate in the second quarter could throw cold water on the borrowers’ expectations that the credit rates will come down, as per analysts.
Banks are seen to be aggressive in lending at a time when the central bank has been closely monitoring their deposit and credit mobilisation plan.
| Comparative data | ||
| Date | Deposit | Credit |
| Mid-Aug, 2017 | Rs 2,106bn | Rs 1,732bn |
| Mid-Sept, 2017 | Rs 2,127bn | Rs 1,763bn |
| Mid-Oct, 2017 | Rs 2,142bn | Rs 1,787bn |
| Mid-Nov, 2017 | Rs 2,165bn | Rs 1,823bn |
| Mid-Dec, 2017 | Rs 2,193bn | Rs 1,870bn |
| Mid-Jan, 2018 | Rs 2,214bn | Rs 1,922bn |
| Mid-Feb, 2018 | Rs 2,208bn | Rs 1,947bn |
| Mid-Mar, 2018 | Rs 2,219bn | Rs 1,962bn |
| Mid-Apr, 2018 | Rs 2,268bn | Rs 2,002bn |
| Mid-May, 2018 | Rs 2,293bn | Rs 2,023bn |
| Mid-Jun, 2018 | Rs 2,336bn | Rs 2,063bn |
| Mid-Jul, 2018 | Rs 2,470bn | Rs 2,111bn |
| Mid-Aug, 2018 | Rs 2,455bn | Rs 2,115bn |
| Mid-Sept, 2018 | Rs 2,502bn | Rs 2,174bn |
Source:NBA
The post Lending rate unlikely to go down this fiscal as well appeared first on The Himalayan Times.
Written by Sandeep
This news first appeared on https://thehimalayantimes.com/business/lending-rate-unlikely-to-go-down-this-fiscal-as-well/ under the title “Lending rate unlikely to go down this fiscal as well”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.
