Deposit collection, loan extension improved in BFIs

The deposits mobilisation in Banks and Financial Institutions (BFIs) has increased by 7.6 per cent during the first eight months of the current fiscal year.

According to the current macroeconomic and financial report of Nepal Rastra Bank (NRB), the deposits at BFIs increased by Rs. 435.87 billion (7.6 per cent) in the review period compared to an increase of Rs. 280.57 billion (5.5 per cent) in the corresponding period of the previous year. 

On y-o-y basis, deposits at BFIs expanded by 14.6 per cent in mid-March 2024. The share of demand, saving and fixed deposits in total deposits stood at 6.5 per cent, 28 per cent and 58.7 per cent respectively in mid-March 2024. 

Such shares were 7.9 per cent, 25.7 per cent and 59.8 per cent respectively a year ago. The share of institutional deposits in total deposit of BFIs stood at 36.5 per cent in mid-March 2024. Such a share was 36.8 per cent in mid-March 2023.

Similarly, private sector credit from BFIs increased by Rs. 199.50 billion (4.2 per cent) in the review period compared to an increment of Rs. 128.18 billion (2.8 per cent) in the corresponding period of previous year. 

On y-o-y basis, credit to the private sector from BFIs increased by 5.2 per cent in mid-March 2024. The shares of private sector credit from BFIs to non-financial corporation and household stand at 63.2 per cent and 36.8 per cent respectively in mid-March 2024. 

Such shares were 64.6 per cent and 35.4 per cent a year ago. In the review period, private sector credit from commercial banks, development banks and finance companies increased by 4.2 per cent, 3.5 per cent and 3.9 per cent respectively, said the NRB.

Out of the total outstanding credit of the BFIs, 11.7 per cent is against the collateral of current assets (such as agricultural and non-agricultural products) and 67.5 per cent against land and building. 

In the review period, outstanding loan of BFIs to the agriculture sector loan increased by 0.3 per cent, production sector by 8.7 per cent, construction sector by 6 per cent, transportation, communication and public sector by 8.3 per cent, wholesale and retail sector by 3.2 per cent, service industry sector by 5.2 per cent and consumable sector by 6 per cent.

Similarly, the term loan extended by BFIs increased by 15.9 per cent, cash credit loan by 24.6 per cent, trust receipt (import) loan by 11.5 per cent, real estate loan (including residential personal home loan) by 5.9 per cent, and margin nature loan by 12.3 per cent.

However, overdraft loan of BFIs decreased by 43 per cent (mainly due to reclassification of loan from the last year) and hire purchase loan decreased by 20.7 per cent.