According to the central bank, commercial banks collected deposits of Rs 6,717 billion by the second week of Kartik. Meanwhile, they extended loans of Rs 5,012 billion during the period.
The BFIs extended loans of Rs 5,635 billion during the period. As per NRB, development banks and finance companies collected deposits of Rs 758 billion and extended loans of Rs 623 billion.
In the review period, the CD ratio of banking sector has remained at 74.25 percent. Although the banking sector has huge potential of loan extension, it has remained stagnant for a long period.
In recent times, demand for loans is in decreasing trend. The average base rate of banks is falling like never before. The base rate of banks for Kartik has been set at 5.67 percent which is quite low. The banks add certain percentage of premium to extend loans.
However, the loans extension has remained sluggish which has raised liquidity in the BFIs.
In order to maintain liquidity in the financial market, NRB is mopping excess liquidity for the long period. The bank mopped excess liquidity of Rs 40 billion for 175 days on Sunday and again on Wednesday.
