KATHMANDU: Banks and financial institutions have disbursed Rs 93.52 billion to the private sector in the first two months of the current fiscal year. Although credit flow has almost doubled compared to the same period last year, the situation of investment expansion in the productive sector has been mixed. Credit to the agriculture sector has decreased, while credit has expanded to the mineral, industrial production, construction and trade sectors. <\/p>\n
According to the Nepal Rastra Bank, credit from banks and financial institutions to the private sector increased by 1.6 percent to Rs 5.95 trillion as of mid-September 2018. In the first two months of the previous fiscal year, banks and financial institutions had disbursed loans worth Rs 49.24 billion to the private sector. Credit flow increased by Rs 44.28 billion in the same period of the previous year. <\/p>\n
Although the flow of credit has increased compared to the previous year, the question of how much it has expanded production, employment and business activities in the economy is important. The flow of credit from the bank and the increase in real output due to its effect are different matters. The impact of credit expansion can be evaluated only on the basis of which sector the credit has gone into, how it has been used and what returns it has given to the economy. <\/p>\n
According to the Rastra Bank, credit to commercial banks has increased by 1.7 percent in the first two months of the current fiscal year. Credit to development banks has increased by 0.6 percent and that of finance companies by 1.4 percent. On a year-on-year basis, credit to the private sector has increased by 7.3 percent in mid-September 2083. <\/p>\n
Sectorally, the mineral sector has the highest credit expansion of 10.4 percent. Loans have increased by 7.6 percent in the production and repair sector of transport equipment and repair and 7.3 percent in the production and repair sector of metal products, machinery and electrical goods. Credit to the construction sector has increased by 3.7 percent and in the service industry sector by 2.7 percent. <\/p>\n
Similarly, credit to wholesale and retail trade increased by 2.5 percent, transport, communication and public service by 2.1 percent and industrial production by 1.9 percent. In the consumer sector, the credit expansion rate is only 0.2 percent. <\/p>\n
The increase in credit in some sectors related to production indicates that the demand for investment in those sectors is expanding. The increase in credit especially in the minerals, transport equipment and metal products sector shows the possibility of investment in industrial and commercial activities. However, it cannot be concluded that there has been an improvement in production and employment on the basis of credit growth alone. For this, the actual production, capacity utilization and employment generation of the respective sectors should also be looked at. <\/p>\n
Credit to the agriculture sector declined by 2.2 per cent during the period. Loans to the finance, insurance and real estate sectors also declined by 4.7 per cent. While overall credit to the private sector is expanding, the decline in credit to the agriculture sector raises questions about the sectoral priority of banking investment. The reasons for the decline in credit in this sector need to be further studied as the availability and utilization of credit in agricultural production, commercial farming and agricultural processing are important.<\/p>\n","protected":false},"excerpt":{"rendered":"
KATHMANDU: Banks and financial institutions have disbursed Rs 93.52 billion to the private sector in the first two months of the current fiscal year. Although credit flow has almost doubled compared to the same period last year, the situation of investment expansion in the productive sector has been mixed. Credit to the agriculture sector has […]<\/p>\n","protected":false},"author":16,"featured_media":296962,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45117,45031,45159],"tags":[],"class_list":["post-321097","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-finance-en","category-banner-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/321097","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=321097"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/321097\/revisions"}],"predecessor-version":[{"id":321098,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/321097\/revisions\/321098"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/296962"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=321097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=321097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=321097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}