Loan Disbursement Increases from Banks and Financial Institutions Following Interest Rate Cuts

According to the latest two-month economic and financial report published by Nepal Rastra Bank, loan disbursement from banks and financial institutions has increased following a reduction in interest rates. In the first two months of the current fiscal year, loan disbursement from banks and financial institutions grew by 1.4%.

Increase in Loan Disbursement: In the first two months of the current fiscal year, loans worth NPR 73.39 billion were disbursed, showing a 1.4% increase. In the same period last year, only NPR 33.60 billion in loans had been disbursed.

Annual Growth: As of the end of Bhadra 2081, year-on-year loan disbursement to the private sector increased by 6.6%.

Loan Distribution: Out of the loans disbursed to the private sector, 64.0% were to non-financial institutional sectors, while 36.0% went to individuals and households. In the same period last year, these ratios were 63.0% and 37.0%, respectively.

Loan Disbursement by Various Banks:

• Commercial banks' loan disbursement increased by 1.5%.

• Development banks' loan disbursement increased by 1.1%.

• Finance companies' loan disbursement increased by 3.0%.

Collateral-Based Loans:

• As of the end of Bhadra 2081, 66.2% of the loans were backed by real estate collateral.

• 13.2% of the loans were secured by movable assets (agricultural and non-agricultural products). Last year, these figures were 67.2% and 12.1%, respectively.

This increase in loan disbursement following the reduction in interest rates is seen as a positive sign for Nepal's financial sector.