Kathmandu. Banks facing the challenge of debt recovery are under pressure to increase their loan investment in June. They stressed the need for some improvement in the expansion of credit as the flow of credit to other sectors from small and medium enterprises is not at the expected pace.
Of late, hydropower projects and other construction works have been progressing. Which has increased the demand for credit to some extent.
The banks, which could invest only Rs 36 billion in June last year, have set a target to extend loans a little more than that in June.
The loan expansion, which fell by Rs 4 billion in April, was slightly extended in May. They believe that the same growth will continue in June as well.
Commercial banks could not extend loans in April last year. Loan expansion, which decreased by Rs 4 billion in April, increased slightly in May. They believe that some more loans will increase in June. As of Mid-April, the loan investment of commercial banks stood at Rs 4,911 billion. Which has reached Rs 4.947 trillion in May.
Commercial banks had invested Rs 4.915 trillion in loans as of March 2018. The highest amount of credit investment this year was made in December. Loan investment of Rs 94 billion was made in December, which decreased again after that.
The banks had extended loans worth Rs 53 billion in July, while they invested Rs 56 billion in August last year. Similarly, loans worth Rs 42 billion were extended in November, but less than that has been extended since then. Compared to last June, the loan expansion had increased by Rs 2 billion in July. The credit expansion of commercial banks, which increased from Rs 4,571 billion in July 2018, increased by Rs 2 billion in July and decreased by Rs 2 billion in October.
The construction sector is moving a bit in June. On the one hand, imports are increasing and on the other hand, the construction sector is slowly moving. Similarly, the demand for loans has gradually increased due to the fall in the interest rate on loans.
Bankers are confident that the demand for loans will increase in June. After that, they believe that the loan will gradually increase.
