Kathmandu, December 14

Credit expansion of banks and financial institutions (BFIs) in quake-affected districts increased by 19.13 per cent to Rs 863.43 billion in last fiscal 2015-16 as compared to fiscal 2014-15 despite the unfavourable economic situation in the last fiscal caused due to the quake and disruption in supply lines from India.

The recent report of Nepal Rastra Bank (NRB) titled ‘Economic Activities Study Report 2015-16’ reveals a moderate expansion in credit in quake-hit districts in the last fiscal. However, credit growth was slower than in fiscal 2014-15.

Out of the 14 severely affected districts, NRB has compiled data of 12 districts, namely, Gorkha, Makawanpur, Sindhuli, Kathmandu, Lalitpur, Bhaktapur, Sindhupalchowk, Dolakha, Kavre, Dhading, Nuwakot and Rasuwa.

Credit expansion in Makawanpur district was highest in the review period. Credit expansion of BFIs in Makawanpur increased by 40.34 per cent to Rs 17.89 billion in fiscal 2015-16, compared to Rs 12.74 billion in 2014-15.

Credit expansion of BFIs was expected to be sluggish in the last fiscal year because the industrial and service sectors were shattered by the earthquake and faced another shock of a four-and-a-half-month long border blockade that started in the last week of September, 2015.

“Expansion of credit from BFIs in the quake-affected districts will stimulate the economic activities of the said areas,” said Nara Bahadur Thapa, executive director at the Research Department of NRB.

“The output of the credit expansion in productive sector will have a positive impact to accelerate growth of the productive sector in current fiscal 2016-17 as well.”

The country’s economy witnessed just 0.77 per cent growth in fiscal 2015-16, which was largely backed by the service and consumption sectors.

Of the 12 districts, Makawanpur, Bhaktapur, Lalitpur, Sindhupalchowk and Nuwakot had higher credit growth in the last fiscal as compared to fiscal 2014-15, according to the NRB report.

In terms of loan disbursement in fiscal 2015-16, three districts of Kathmandu Valley covered 93 per cent of the total loan disbursed among the 12 quake-hit districts.

Loan disbursement in Kathmandu increased by 20.02 per cent to Rs 726.4 billion, according to the NRB report.