KATHMANDU, July 21: Nepal’s commercial banks disbursed loans worth Rs 319 billion in the last fiscal year (FY), falling significantly short of the Nepal Rastra Bank’s (NRB) target of expanding private sector lending by 12 percent.
Despite the central bank’s directive, loan expansion stood at only around six percent (Rs 597 billion) largely due to declining interest rates and excessive liquidity in the banking system.
Revised interest rate corridor system introduced
During the review period, three banks reduced their private sector loan portfolios. NIC Asia Bank recorded the largest decline of Rs 28.41 billion, followed by Standard Chartered Bank Nepal with a fall of Rs 17.64 billion, and Prabhu Bank with a reduction of Rs 9 billion.
Conversely, Nabil Bank posted the highest growth, expanding its loan portfolio by more than Rs 54 billion. The bank alone accounted for over 17 percent of the total loan expansion among 17 commercial banks last fiscal year. Rastriya Banijya Bank and Global IME Bank followed with increases of Rs 38 billion and Rs 36 billion, respectively.
While loan growth remained sluggish, deposit collection surged. Commercial banks mobilized deposits worth Rs 967 billion in the year, marking a 15 percent rise compared to the previous year. This imbalance between high deposit inflows and limited lending pushed the credit-deposit (CD) ratio down to 71 percent, well below the regulatory ceiling of 90 percent.
Rastriya Banijya Bank led deposit growth, adding Rs 187 billion, followed by Global IME Bank with Rs 125 billion. Nepal Bank and Nabil Bank increased deposits by Rs 82.5 billion and Rs 70 billion, respectively. Prabhu Bank recorded the smallest rise, with deposits up by just Rs 5 billion.
