Kathmandu. Credit flow from banks has slowed down in The month of June. Credit expansion has also slowed down due to low demand for credit.
In previous years, the credit expansion had picked up pace in the last month of the fiscal year. Banks also increased their lending as the development expenditure would increase, the last phase of the government budget would be spent, and various projects and business activities would intensify. However, such a trend was not seen in june of the current fiscal year.
Bankers are worried about not being able to increase credit flow now. Banks that have focused on loan recovery have also not been able to increase the recovery.
According to Nepal Rastra Bank data, the total loan investment of commercial banks has reached Rs 4.962 trillion as of June 15. So far, banks have invested only Rs 15 billion in loans. This number of credit flows is less than in the past. In this way, the credit expansion of banks will not be significant in the remaining days.
There are various reasons why banks are not speeding up lending. Bankers say that the demand for credit is weak now. There is no demand to invest in big industries, hydropower projects or new enterprises.
Similarly, there is little possibility of investment in construction-related projects and hydropower as the monsoon has already started. At the same time, banks are also facing problems in recovering loans. Although the interest rate has come down slightly, the borrowers are not willing to repay the loan.
Small and medium-sized borrowers, in particular, have seen a decline in their ability to repay loans. Even as the pace of post-pandemic economic recovery slows, borrowers are still stuck with old loans. This is hampering the cash flow of banks.
Commercial banks have invested Rs 36 billion in loans in May alone. Loan expansion, which decreased by Rs 4 billion in April, increased slightly in May. As of Mid-April, the loan investment of commercial banks stood at Rs 4,911 billion. It has reached Rs 4.947 trillion by mid-June. According to this data, loan investment has increased by Rs 36 billion in May alone.
Commercial banks had invested Rs 4.915 trillion in loans as of March 2018. It had come down by Rs 4 billion to Rs 4,911 billion in April.
Loans worth Rs 53 billion were extended in August, Rs 53 billion in August and Rs 56 billion in September. In October, negative loans had increased by Rs 2 billion.
Similarly, rs 42 billion was invested in November, while the highest amount of Rs 94 billion was invested in December this year. After this, rs 12 billion was invested in February, Rs 23 billion in February and Rs 65 billion in March. In May, the increase was negative from Rs 4 billion to Rs 36 billion in May.
