As deposits increase and credit investment shrinks, the banking system has moved towards a comfortable state.
According to Narayan Prasad Pokhrel, Assistant Spokesperson of Nepal Rastra Bank, the total deposits of banks reached 51 trillion 29 billion as of 30 October. On 31 August 2079, total deposits were 50 trillion 89 billion.
40 billion rupees deposits have been added to the banking system for a period of one month. While during the same period, the loan decreased by 1 billion. The co-spokesperson of Rashtra Bank, Pokhrel, says that the loan investment, which was 47 trillion 23 billion on 31 August 2089, decreased to 47 trillion 22 billion on 30 October.
Due to increase in deposits and decrease in credit investment, the CD ratio (debt-resource operating ratio) which was above 87 percent has fallen below 87 percent in a month.
When studying only commercial banks, it is seen that loan investment decreased by 8 billion in one month. Credit investment which was 41 trillion 90 billion on 31 August has decreased to 41 trillion 82 billion on 30 October.
The total deposits of commercial banks were 44 trillion 86 billion on 31 August, and increased by 32 billion to 45 trillion 18 billion on 30 October.
Santosh Koirala, chief executive officer of Machhapuchche Bank, who is also an executive member of the Bankers' Association, says that in October, banks will give priority to loan recovery and when loan investment is completely stopped except for the essential, the loan investment will shrink.
He said that due to the increase in deposits and shrinking credit investment, the CD ratio has decreased and the situation has become somewhat comfortable. He said that it seems that the banking sector has gone towards reform. He said that the situation in the banking sector is improving as deposits are increasing but loans are not.
Banks controlled loans. Dashain-Tihar saw growth in deposits and remittances also increased. I think that it will improve if the banks control the credit as it is now," he said. "The government has also controlled the import till the end of November. The situation seems to be improving.
The CD ratio of the banking system, which has 51 trillion deposits, is below 87 percent. Nepal Rastra Bank has made arrangements for banks to maintain 90 percent CD ratio. Based on this, it seems that even if the average CD ratio of banks increases to 3 percent, there will be no problem. 3 percent of 51 trillion means banks have stopped investing loans even though they have the capacity to invest up to 1 trillion 53 billion.
Banker Koirala says that after assessing the challenges that may be added in the future, he did not invest the loan. Nepal Rastra Bank has already said that it will give re-loans only up to the limit in the re-loan fund from the current financial year. According to this, within the next few months, refinancing should be brought within the limit of 45 billion. Pokhrel, the co-spokesperson of Nepal Rastra Bank, says that 1 trillion 5 billion is currently under reloan investment.
Similarly, banks are currently calculating deposits of 80 percent of the amount in the accumulated funds of the local level. As only 50 percent of deposits can be calculated after the end of January, banks will have to manage it and move forward.
On the other hand, from the end of June, the banks are currently counting over one billion bonds as deposits. Bonds classified for capital purposes cannot be counted in deposits.
Koirala said that all these have to be managed and as there are rapid fluctuations in deposits, keeping that in mind, banks have not invested in loans even though they have the capacity.
Pokhrel, co-spokesperson of Nepal Rastra Bank, also says that the liquidity is increasing, the balance taken with the Rashtra Bank is decreasing and the CD ratio has come down a bit and it seems that there will be some ease.
According to the Rastra Bank, the amount due for liquidity management on October 2 reached 95.86 billion 93 million. Previously, such arrears were up to 2 billion.
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