Kathmandu, January 11 - Bankers seem to have largely ignored the credit crunch situation of the last fiscal, as credit expansion of banks is almost double than deposit collection in the first five months of the current fiscal.

According to Nepal Bankers’ Association — the umbrella network of class ‘A’ financial institutions in the country — banks disbursed loans worth Rs 156 billion between mid-July and mid-December against deposit collection worth Rs 88 billion over the same period.

Consequently, the average credit to core capital plus deposit (CCD) ratio of banks hovered around 78.24 per cent as of mid-December, as banks had mobilised deposits worth Rs 2,089 billion and loans worth Rs 1,877 billion by that period.

The CCD of the banks is set to overshoot from mid-January (first half of the fiscal), when the government collects 40 per cent of annual estimated income tax. While around Rs 40 billion will be withdrawn to file income tax, additional Rs 8 billion will be withdrawn in the immediate future, as the central bank has approved profit repatriation of Ncell, a private telecommunication service provider.

“Banks have a cushion of around Rs 45 billion to meet the permissible CCD ratio of 80 per cent,” Shovendev Pant, CEO of Bank of Kathmandu, told THT.

Nepal Rastra Bank — the central regulatory and monetary authority — has time and again objected to banks’ aggressive lending policy when deposit mobilisation is sluggish. NRB Governor Chiranjibi Nepal has urged the banks to create balance between deposit collection and loan disbursement. “Banks should mobilise loans in accordance with their deposit collection,” Governor Nepal asserted while talking to THT.

He added that bankers were inviting a looming crisis of credit crunch to earn quick profits, and that they were not proactive in attracting more deposits. He warned that the central bank would penalise banks that breached the CCD rules.

Bankers, however, claim that this is sound credit growth as per the demand of the economy.

“The monetary policy has envisioned 20 per cent credit growth to the private sector and there was around nine per cent credit growth in the first five months,” a banker said requesting anonymity. According to the banker, banks have floated loans more patiently this fiscal, but deposits grew by just 4.4 per cent in the review period.

Bankers criticised slow government expenditure and negative growth of remittances for sluggish deposit growth. Bankers say the issue of low deposit collection can be addressed if the government accelerates development works and provides refinancing packages to address this ‘short-term phenomenon’ of credit crunch.

Source: The Himalayan Times

Corporate News

Country’s forex reserves slump to 32-month low

Kathmandu, December 24- Nepal’s foreign exchange reserves have slumped to a 32-month low despite robust growth in remittance income and downward revision in foreign exchange facility for Nepalis visiting overseas, raising the spectre of the country facing a balance of payments crisis if the problem continues to grow.

Read more ...

Doha Bank opens representative office in Nepal

Kathmandu, December 19 - Doha Bank, one of the largest commercial banks in Qatar, has opened its liaison office in Nepal as per the permission granted by the central bank about six months ago.

Read more ...

Parliament body asks govt to solve problem of multiple taxation

KATHMANDU, Aug 15: Parliament’s Finance Committee on Tuesday issued directions to the government to take the lead in solving the chronic problem of multiple taxation by the three tiers of government, as well as the exorbitant hike in tax rates.

Read more ...

Trade deficit surged five-fold in last decade

Kathmandu, August 5 - The country’s trade deficit jumped five folds in the last decade as imports have been skyrocketing and exports have slowed to a crawl in the review period.

Read more ...
Symbol % Change Last Price Turnover
NBBL 3.3898 610.0 129,958.0
SLBSL 3.2078 740.0 1,120,390.0
CHL 2.9703 104.0 14,538.0
RLFL 2.5862 119.0 339,371.0
IGI 2.2113 416.0 224,710.0
Symbol % Change Last Price Turnover
UPCL -10.0000 270.0 65,860.0
SHIVM -9.9138 418.0 1,737,870.0
AMFI -4.7546 621.0 57,140.0
NSEWA -3.6893 496.0 354,830.0
AKJCL -3.6585 79.0 70,010.0
Symbol % Change Last Price Turnover
ALBSL -3.5294 492.0 15,575,910.0
SBLPO 1.8519 165.0 10,510,995.0
CIT -1.5038 2,620.0 10,342,811.0
UPPER -0.4167 239.0 9,872,309.0
NLIC -0.0932 1,072.0 8,405,577.0