Deposit collection soars by 10 percent

Deposit collection soars by 10 percent
eKantipur.com, 22-Jun-2007

Total deposits at the banking sector grew by over 10 percent during the first nine months of the current fiscal year as remittance inflow continued to flood the banks.

The data of Nepal Rastra Bank shows that the total deposits stood at Rs 321 billion by mid-April, up from Rs 291 billion in last mid-July.

Flushed with money caused by healthy inflow of remittance, more people are saving money in banks, bankers said. Besides, tough competition among banks to lure depositors by reducing the cost for opening accounts also helped to expand people's access to financial services, they said.

Terming the growth as normal, Sashin Joshi, chief executive officer of NIC Bank, said banks are setting up new branches even outside the Kathmandu Valley. “In addition, more people have put their money in financial institutions due to perceived security problem at home,” he said.

Of the total deposits, Rs 39.8 billion was kept in current account while Rs 166.2 billion was deposited in savings account. Likewise, 30 billion rupees was saved in fixed deposit.

During the period, the banks reported an impressive growth of over 27 percent in loan extensions. They gave loans amounting to Rs 221 billion by mid-April, compared to Rs 173 billion in last mid-July.

Almost all loans went for the private sector. Banks issued loans amounting to Rs 214 billion to private parties. Loans extended against government-owned enterprises fell by around 22 percent to almost seven billion rupees, down from Rs 9.21 billion.

Bankers said despite the end of armed conflict, industrial sector has not revived. “Demand for loans for this sector has not gone up considerably. Still, banks are managing their deposits and investing on retail lending more aggressively,” said a banker.

The investment of commercial banks on government securities was almost same at around Rs 57 billion during the period.

On the account of steady rise in deposit mobilization, total liquidity at the banking sector increased by 22.93 percent. The liquidity that was Rs 38.8 billion rupees in the beginning of the current fiscal year reached Rs 47.7 billion by the mid-April.

In order to reduce liquidity, the bankers said, mega projects should come into operation.