Deposit collection of BFIs exceeds 6 trillion

Feb 21, 2024 11:38 AM Merolagani

The banks and financial institutions have collected total deposits of Rs 6,161 billion by February 17 as per the data published by Nepal Rastra Bank (NRB).

Out of the total deposits, commercial banks collected Rs 5,446 billion while other financial institutions collected deposits of Rs 714 billion.

In recent days, skyrocketing deposit collection along with snail-paced loan extensions have created huge liquidity pile-ups in banks. Consequently, the interest rates are going down.

Amid this, NRB started providing permanent deposit facilities to banks to mop excess liquidity from the financial system, however, it has not contributed little to maintain the interbank interest rate to the required margin. The interbank interest rate has declined below 3 percent. The banks can utilize the facility at 3 percent interest rates twice in a week.

The central bank gave the facility to make interest rate corridor effective. NRB was trying to bring the interbank interest rate within the limit for many months, however, the rate was below the lower rate.  However, since the introduction of the permanent deposit facility, the interbank interest rate was set at 2.99 percent on February 16.

Currently, BFIs are reeling under excess liquidity. The CD ratio of banks has fallen to 80.15 percent. It shows that the banks have more than Rs 550 billion in investable funds, however, the banks have not been able to increase loan extensions.

comments powered by Disqus