Kathmandu, July 1

Loan disbursement has started falling in the country, as the fiscal year has entered its final month. Commercial banks extended credit worth Rs four billion in the one-week period between June 17 and 24, as against weekly disbursement ranging from Rs six billion to Rs 20 billion in the past, show the latest statistics of the Nepal Bankers’ Association.

Banks generally tighten loan disbursement a month before the fiscal year draws to an end, as they have to put everything in place to prepare the year-end balance sheet.

“During this period we focus on collection and ask borrowers to repay the debt,” said Sanima Bank CEO Bhuvan Kumar Dahal. “So, fall in credit flow during this time of the year is normal and will grow soon after new fiscal year begins (on July 16).”

Demand for loan has been going up in the country since the blockade on Nepal-India border points was lifted in the first week of February. Since then commercial banks have extended credit worth Rs 166 billion.

While the credit flow has tapered, the level of deposits at commercial banks is going up.

In the one-week period between June 17 and 24, deposits at commercial banks went up by around Rs 19 billion.One of the reasons for this is the completion of the merger between Siddhartha Bank and Business Universal Development Bank (BUDB) on June 21, which drew deposits of the development bank to the commercial bank.

But the deposits are likely to come under pressure in the coming days as the remittance growth rate decelerated to 10.2 per cent in May from as high as 27.5 per cent in September.

Currently, the 29 commercial banks of the country have a deposit stock of around Rs 1,686 billion, of which Rs 1,573 billion is in domestic currency, while Rs 113 billion is in foreign currency.