Nepal | July 12, 2020

Bank deposits surge in line with govt spending

Himalayan News Service
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Kathmandu, July 21

A sudden growth of deposits was witnessed in the banks along with a rise in government expenses in the last month of the previous fiscal.

Bank deposits surged by Rs 81 billion in the one-month period between June 15 and July 16, the last month of the Nepali fiscal year, according to Nepal Bankers’ Association.

Bank deposits, which stood at Rs 2,274 billion in mid-June, ballooned to Rs 2,355 billion in mid-July, the NBA data shows.

Banks had been facing scarcity of deposits since the start of last fiscal due to low government expenditure, retarded growth of remittances, and sluggish exports. Thus, increased development expenses towards the very end of the fiscal provided some relief to deposit-starved banks.

The government had spent Rs 203 billion in the last month of the Nepali fiscal, according to the Financial Comptroller General’s Office. “Of the total amount spent in the last month, Rs 72.6 billion was spent as payments for development works or capital expenses.”

The government issued payments worth Rs 14.63 billion — Rs 12.1 billion under capital budget, Rs 2.19 billion under recurrent expenses and Rs 367.06 million under the financing heading — just on the last day of the previous fiscal.

Along with rise in deposits at the end of the fiscal, banks are now in a comfortable position to maintain the regulatory requirement of credit to core capital plus deposit ratio.

The average CCD ratio of the banks stood at 78 per cent against the regulatory threshold of 80 per cent at the end of fiscal 2017-18.

Bhuvan Kumar Dahal, CEO of Sanima Bank, said the banks witnessed sudden windfall of deposits in the last month of fiscal 2017-18 along with the surge in government expenses, which he added, was a regular phenomenon in Nepal’s budgetary spending.

According to NBA, 28 commercial banks in operation mobilised credit worth Rs 369 billion against deposit collection worth Rs 354 billion in the previous fiscal. The mismatch between deposit collection and credit mobilisation had resulted in a crisis of loanable funds and high lending rates last fiscal.


A version of this article appears in print on July 22, 2018 of The Himalayan Times.


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