Banking Sector Shows Positive Growth in Deposits and Lending Amid Stable Market Conditions

The banking sector in Nepal has shown a steady increase in deposits and loan disbursements, reflecting improving financial confidence and liquidity in the system. According to the Nepal Rastra Bank, total banking system deposits rose by NPR 1 billion to reach NPR 6.64 trillion as of December 1. This marginal growth, up from NPR 6.639 trillion the previous day, signals stability in depositor sentiment despite recent market uncertainties.

Commercial banks contributed significantly to the rise in deposits, increasing their collection by NPR 1 billion over the same period. On November 30, deposits in these institutions stood at NPR 5.805 trillion, which climbed to NPR 5.806 trillion by December 1. The consistent inflow into commercial banks suggests sustained trust in the financial system and robust deposit mobilization strategies.

Loan disbursements also witnessed a notable increase, growing by NPR 2 billion across banks and financial institutions. The total lending, which stood at NPR 5.306 trillion on November 30, reached NPR 5.308 trillion by December 1. This rise indicates a growing appetite for credit among businesses and individuals, potentially driven by year-end demand and economic activities.

Commercial banks alone disbursed NPR 4.702 trillion as of December 1, reflecting a NPR 2 billion increase from NPR 4.7 trillion the previous day. The rise in lending activity suggests that banks are maintaining their lending momentum, supporting sectors that rely on year-end financing to meet operational needs.

The average credit-to-deposit (CD) ratio stood at 78.59%, well within regulatory limits, ensuring sufficient liquidity for further lending. Meanwhile, the interbank lending rate remained steady at 3%, highlighting stable borrowing conditions among banks and indicating no immediate liquidity stress in the system.

The slight yet consistent growth in deposits and lending reflects a well-managed banking system. The rise in deposits suggests increased liquidity within the market, while the uptick in lending indicates growing confidence in economic recovery and investment opportunities. A stable CD ratio and interbank lending rate further demonstrate that banks are operating within healthy parameters.

Looking ahead, this trend could signal a period of moderate economic expansion, with banks expected to continue their support for credit growth while maintaining a stable deposit base. However, the banking system must remain vigilant to external shocks, including inflationary pressures or global economic changes, which could impact liquidity and interest rates.