KATHMANDU, June 21: The credit deposit (CD) ratio of commercial banks in Nepal has declined to as low as 48.30 percent, far below the regulatory ceiling of 90 percent fixed by Nepal Rastra Bank (NRB). Analysts attribute the sharp decline in CD ratio to the difficulty faced by banks to expand their lending.
According to reports from 20 commercial banks, their average CD ratio over the past 11 months fell by 3.77 percentage points. As of mid June this year, the average CD ratio stood at 72.42 percent, down from 76.18 percent in mid July 2025.
NRB data shows that in the first 11 months of the current fiscal year, commercial banks collected additional deposits worth Rs 723 billion. However, they disbursed only Rs 288 billion in new loans during the same period. This imbalance has resulted in excessive loanable funds piling up within the banking system. As of last week, total deposits reached Rs 7.253 trillion, while total loans amounted to just Rs 5.263 trillion.
Revised interest rate corridor system introduced
Among individual banks, Standard Chartered Bank Nepal recorded the lowest CD ratio at 48.30 percent, with its benchmark index declining by 21.14 percent during the review period. Rastriya Banijya Bank followed with a CD ratio of 55.78 percent. Seven commercial banks reported CD ratios between 60 and 70 percent, while six banks were between 70 and 80 percent. NMB Bank had the highest CD ratio at 84.13 percent, while Prime Commercial Bank, Sanima Bank, Everest Bank, and Nabil Bank all reported ratios above 80 percent.
With liquidity rising, banks have continuously reduced interest rates on deposits and loans over the past three years. At present, the average deposit rate of commercial banks has dropped to 3.35 percent, while the average base lending rate has fallen to 6.73 percent.
Although the demand for loans typically depends on interest rates, banks have been unable to expand lending despite the sharp decline in rates. A banker, speaking on condition of anonymity, said the accumulation of deposits has created problems. “This has led to an increased cost of funds,” the banker noted.
In response to the situation, banks have been parking large sums of money with the central bank under the standing deposit facility (SDF) scheme. NRB reported that it currently holds Rs 999.35 billion from banks and financial institutions under this arrangement.
