Credit and Deposit Growth in Nepal

Kathmandu. As of the end of the current fiscal year 2082/83, the credit extended to the private sector by banks and financial institutions has increased by 4%, reaching NPR 57.19 trillion. However, this growth is significantly slower compared to the 5.6% increase seen in the previous year, indicating weak demand in investment and production sectors in the economy.On the other hand, deposits in the banking system have been growing at a rapid pace. By the end of Magh, total deposits increased by 6%, reaching NPR 76.98 trillion. On an annual basis, deposits have grown by 14.9%, indicating sufficient liquidity in banks, though this liquidity has not been effectively converted into loan expansion.Sector-wise, loans to the consumer sector grew by 10.6%, while loans to agriculture decreased by 1.4%, signaling weak investment in production sectors. Loan flow has increased by 4.2% from commercial banks, 3% from development banks, and 1.8% from finance companies.The deposit structure comprises 6.5% in demand deposits, 42.8% in savings deposits, and 41.6% in term deposits, indicating reduced attraction to long-term deposits.