Bank deposits up 10 percent in first half of fiscal year

KATHMANDU, FEB 25 -

Banks and financial institutions (BFIs) saw their deposit base swell 10.4 percent in the first half of the current fiscal year. According to the latest macro economic report of Nepal Rastra Bank (NRB), deposits expanded by Rs 85.68 billion in the first six months.

All three categories of financial intermediaries registered a surge in their liquidity with commercial and development banks recording double-digit growth. However, the deposit growth of financial companies was 1.7 percent.

NRB said that the phenomenal growth in deposits in the financial system was due to the policy measures taken by the central bank. “We did great work by punishing those involved in banking fraud and bad governance,” said Bhasker Mani Gnawali spokesperson of NRB. “It helped to restore public confidence which had been shaken previously.”

According to Gnawali, the mandatory provision to insure individual deposits of up to Rs 200,000 also pushed up deposits as it gave the people a feeling of security that their money would be safe.

However, bankers have their own reasons for the rise in deposits. They have attributed the growth to increased inward remittance during the review period and timely publication of the government’s fiscal policy. “Remittance growth over the period was phenomenal,” said a banker. “The size of remittance is always reflected in the deposit base of the formal financial system.” Gnawali admitted that remittance inflow which increased by more than 37 percent during the review period played its role in increasing bank deposits.

NIC Bank CEO Sashin Joshi said that government expenditure played a crucial role for the ample liquidity in the financial system. “Although capital expenditure has not increased much, there is growth in recurrent expenditure of the government,” added Joshi.

The central bank claimed that the favourable liquidity situation would continue. However, Joshi said that it would last for at least the rest of the fiscal year unless there is some big political turmoil. 

BoP surplus hits all-time high of Rs 66b

The balance of payments (BOP) recorded the highest ever surplus of Rs 66.72 billion during the first six months compared to a deficit of Rs 4.26 billion in the corresponding period of the previous year. Similarly, the current account registered a surplus of Rs 31.99 billion compared to a deficit of Rs 3.59 billion previously. According to the NRB report, a surge in remittance along with an improvement in the service account was responsible for the massive rise in the current account.

Source: Kantipur