Some bankers are trying to convey the impression that the economy as a whole is suffering from a cash shortage, the most liquid of assets. Their statements include such things as: interest rates have increased because of reduced liquidity in the market; some banks have stopped disbursements, etc. But a distinction needs to be made between the liquidity problem of some banks and the liquidity problem of the general people. These two must not be confused. There has been no sign yet of any cash shortage facing the latter. Some of the banks might well be experiencing a crunch — some of their ATM machines might not be producing enough cash, or they might not have as much cash as they might want to invest. This is a totally different problem. The commercial banking system is one of the many sub-sets of the economy, and a few bankers are just one of the sub-sets of the commercial banking system.

The Nepali financial market has become highly competitive over the past few years - there are now some two dozen commercial banks, some three dozen development banks, about seven dozen finance companies and numerous cooperatives in the country. But, most of them, particularly the commercial banks, have concentrated their main force in the Kathmandu Valley, and after that, in a few select urban centres, chasing after the same small pie. That means some will be more successful than the others in carving out much larger slices for themselves. Commercial banking is like any other business, and the bankers have to attract sufficient custom to stay in the business for long. As they tend to make the most profitable decisions for themselves, so do ordinary people with surplus cash, and they have several options - keeping cash in hand or in a bank, doing business with other kinds of financial institution, buying shares, buying gold or property, investing in some business venture, or keeping it abroad in expectation of a better return.

For years, banks have given nominal interest to depositors but lent their funds at much higher rates. Keeping money in a bank has meant a reduction in the real value of the deposits, because the interest rates have been well below the inflation rate. On the contrary, the banks, in general, have been showing a good profit, and on the stock exchange, too, it is the financial institutions that have commanded the highest share values. In the normal course of business, some banks prosper; some might lose; or some might even go under. On its part, the Nepal Rastra Bank is also expected to do its major functions in a sound way, such as, to maintain price stability and Balance-of-Payments (BoP) equilibrium. Controlling money supply is its most powerful tool. But the money supply in the economy is in excess of the real income of the people, which has pushed up prices further and worsened BoP deficit, which is becoming a trend after a sizable first-quarter deficit. In recent times, however, remittances have fallen, because, for instance, of a considerable depreciation of the dollar, and there is attraction for capital flight for a much better return. But all this is pure economic logic.