Kathmandu. The amount of interbank transactions in the banking sector has decreased in recent times. Short-term transactions between banks and finance companies have decreased due to the increase in deposits and liquidity.
This is due to the decrease in the number of borrowings from other banks and finance companies for a short period due to the increase in deposits. Due to lack of demand for loans, credit expansion has not increased. This has also reduced the need for banks to conduct interbank transactions.
The interbank transactions have decreased in recent days due to the availability of sufficient liquidity in the banks and financial institutions. The main reason for the decline in interbank transactions is the ease of investment with banks.
According to bankers, interbank transactions are higher when there is more profit with some banks and less with some banks. However, they say that in recent times, most of the banks have been profitable, so there has been a decrease in such transactions.
According to the NRB, in the first three months of the current fiscal year, commercial banks and development banks and finance companies have made interbank transactions of Rs 295.43 billion.
This transaction amount is less than Rs 100 billion compared to the same period last year. In the same period of the last fiscal year, the commercial banks and development banks had transacted Rs 371.25 billion, while the development banks and finance companies had transacted Rs 402.45 billion.
Interbank interest rates have also been falling in recent years. According to the latest data, the average interest rate of interbank transactions is only 2.73 percent.
The decline in interbank transactions has also affected interest rates. The weighted average interest rate on the 91-day Treasury bill was 2.96 percent in September 2081, compared to 1.91 percent in September 2082. The weighted average interest rate of interbank transactions between banks and financial institutions was 2.58 percent in October 2081 compared to 3 percent in October 2081.
In September 2002, the average base rate of commercial banks was 5.56 percent, that of development banks was 7.92 percent and that of finance companies was 8.48 percent. The average base rate of commercial banks was 7.29 percent, that of development banks was 9.13 percent and that of finance companies was 10.35 percent.
