Kathmandu. Non-banking assets worth rs 10.19 billion have been added to the banks in 11 months due to lack of effective recovery of bad loans.
This has been seen from the data released by the Nepal Rastra Bank. Due to lack of credit expansion, the cost of banks is increasing, while non-banking assets are accumulating in banks due to lack of recovery of old loans.
The slowdown in the banking sector is yet to improve. As the private sector has not increased the demand for credit, there is more pressure on the banking sector.
Deposits in banks are on the rise. Nepal Rastra Bank (NRB) has been continuously drawing money from the banking system to manage more liquidity.
The bad loans of the banks and financial institutions stood at 5.24 per cent in the 11 months of the current fiscal year. A total of Rs 45.70 billion worth of non-banking assets of banks and financial institutions have been accumulated. As of Mid-July, there were non-banking assets worth Rs 35.50 billion. In the last 11 months, banks and financial institutions have accumulated an additional Rs 10.19 billion in non-banking assets.
The average bad loan (NPL) of commercial banks stood at 5.05 per cent till May of the current fiscal year. Non-banking assets worth Rs 38.79 billion have been accumulated in commercial banks. This is an increase of Rs 8.61 billion compared to the same period last year. Commercial banks had non-banking assets worth Rs 30.17 billion as of Mid-July 2018.
Similarly, the average NPL of development banks is 5.56 percent till Mid-June of the current fiscal year. Development banks have accumulated non-banking assets worth Rs 4.16 billion till December this year. As of Mid-July, development banks have non-banking assets worth Rs 3.36 billion. In the last 10 months, the non-banking assets of development banks have increased by Rs 794 million.
On the other hand, npl of finance companies has increased to 13.04 percent by mid-May of the current fiscal year. As of May 2018, the finance company’s non-banking assets stood at Rs 2.74 billion. The non-banking assets stood at Rs 1.96 billion as of Mid-July last year. The non-banking assets of the finance company have increased by Rs 783 million.
