Kathmandu. In the 10 months of the current fiscal year (July to April), banks and financial institutions have disbursed a total of Rs 368.68 billion. This is an increase of 8.4 percent compared to the same period last year. Similarly, this is an increase of 7.3 percent compared to last June. However, this growth rate is far below the target of 12.5 percent set by the Rastra Bank for the current year.
According to the target, a loan of about Rs 682 billion will be required to expand the loan. However, till mid-April, only Rs 314 billion less loan has been disbursed.
At present, there is enough investment in the bank and financial system. On an average, more than Rs 500 billion has been deposited and interest rates are at a 47-month low. However, due to lack of improvement in the overall investment environment, slowing demand in the market, and limiting industries to half their capacity, the demand for credit has not increased at the required rate, according to experts. Although the Rastra Bank has adopted monetary flexibility, the banks have failed to expand the loan as expected.
According to top officials of the bank, the target of 12.5 percent set by the Rastra Bank this time was a bit more ambitious. Although the target was 11.5 percent last year, the credit flow was weak even then. Looking at the current situation, it is estimated that by the end of the current financial year, about 9 percent of the loan will be expanded. However, the recent improvement in loan recovery is a positive aspect. Which is likely to speed up the expansion in the coming days.
According to the analysis of the credit flow, the non-financial institutional sector has received 63.1 percent share and 36.9 percent share from the individual and households till mid-April. In the same period last year, these ratios were 63.7 percent and 36.3 percent respectively. Credit flow to commercial banks increased by 7.6 per cent, development banks by 4.1 per cent and finance companies by 6.5 per cent this year. The share of agriculture and commodity security loans in the total investment is 14.6 percent, while the share of real estate mortgage loans is 65.1 percent.
Sector-wise, credit to industrial production sector increased by 9 per cent, construction sector by 12.3 per cent, wholesale and retail trade by 4.9 per cent, transport, communication and public services by 11.9 per cent, service industry by 7.9 per cent and consumer sector by 8.8 per cent. Trust receipt (import) loans increased by 58.1 per cent, margin loans by 39.3 per cent and real estate loans by 5.2 per cent during the period. Overdraft credit fell by 12.9 per cent, indicating that banks have become more aware of risk management.
In the 10 months of the current fiscal year, banks and financial institutions have collected deposits of Rs 399.81 billion. Which is a growth rate of 6.2 percent compared to last year. Deposits had increased by 7.8 percent in the same period last year. At present, deposits have increased by 11.4 percent on a year-on-year basis.
The central bank is in the process of formulating its monetary policy for the next fiscal year. He is now collecting suggestions. Also, a committee has been formed to solve the banking problem. Governor Bishwanath Poudel believes that this will solve the problem and find a solution in the monetary policy. Therefore, experts point out that the monetary policy for the next fiscal year may be somewhat flexible.
At the same time, there is a trend of governors bringing flexible monetary policy for the first time in their first term. If there is a flexible monetary policy, the credit to the private sector will increase in the coming year.
