Decline in Loan Disbursement by Banks and Financial Institutions

In the current fiscal year, the loan disbursement by banks and financial institutions has declined. Despite the monetary policy targeting an 11.5% increase in loan disbursement for this fiscal year, banks and financial institutions have only managed to achieve a 4.7% increase. According to the Nepal Rastra Bank, banks currently have about NPR 700 billion in investable funds. However, due to capital adequacy pressure, banks have been unable to disburse loans. Furthermore, the lack of loan demand has also hindered significant loan disbursement by other institutions.

Monetary Policy Target:

- Goal: Achieve an 11.5% increase in loan disbursement for the current fiscal year.

- Reality: Banks and financial institutions have only achieved a 4.7% increase.

Investable Funds with Banks:

- Amount: Approximately NPR 700 billion.

- Issue: Inability to disburse loans due to capital adequacy pressure.

Capital Adequacy Ratio:

- Requirement: 8.5% primary capital adequacy ratio.

- Situation: Five banks are under pressure, affecting loan disbursement.

Decline in Loan Demand:

- Reason: Economic slowdown and reduced demand for loans in the market.

- Result: Banks have not been able to disburse loans as expected.

Deposit Status:

- Deposit Growth: Exceeded NPR 6.3 trillion.

- Excess Liquidity: Banking system has excess liquidity of NPR 99 billion, nearing NPR 100 billion.

Details from the Last Week:

- Total Deposits:

- As of June 21 (Asar 7): NPR 6.277 trillion.

- As of June 28 (Asar 14): NPR 6.316 trillion.

- Deposit Growth in Commercial Banks: NPR 40 billion.

- As of June 21 (Asar 7): NPR 5.557 trillion.

- As of June 28 (Asar 14): NPR 5.597 trillion.

- Loan Investment Growth: NPR 25 billion.

- As of June 21 (Asar 7): NPR 5.135 trillion.

- As of June 28 (Asar 14): NPR 5.160 trillion.

CD Ratio and Interbank Interest Rate:

- Average CD Ratio: 79%.

- Interbank Interest Rate: 3%.