Banks deposit growth rate slows down: NRB
KATHMANDU, June 27:
The average deposit growth rate of the commercial banks has slowed down by more than eight and half times in the first 10 months of the current fiscal year compared to same period last fiscal year.
The deposits held by the commercial banks have grown at the pace of 0.265 per cent in the ten months, however, within the same time last fiscal year, it had expanded at an average of 2.273 per cent, according to the data of central bank.
By the first six months of the current fiscal year, the deposits parked at commercial banks constantly dwindled. In the beginning of the fiscal year, commercial banks had Rs 630.6 billion as deposits, the deposit amount held by the class ‘A’ financial institutions went down to Rs 628.7 billion in the first six months losing almost Rs 2 billion of deposit.
The liquidity starved financial sector actually had to let go of 0.31 per cent of its total deposits by mid-January 2011.
The four-month delay in budget take a toll on the deposit collection of the commercial banks that were already competing with mushrooming financial institutions and co-operatives.
The delay in budget stalled flow of funds from government coffer freezing the deposit growth. Similarly, the government funds worth billions stood frozen in the central bank while the financial institutions were gasping for liquidity. Had the budget been on time and government expenditure would have been eased the tight liquidity situation.
Moreover, bad financial standings of many financial institutions did not help much in attracting more deposits from the general public as they were confused. Though, almost all of the commercial banks are steady and firm, the latest fall down of bunch of financial institutions shook the confidence of general public regarding parking their hard earned money in banks.
The first two months of the current fiscal year witnessed deposits slumping by more than Rs 12 billion after that the deposit collection did started to pick up. “However, only after sixth months the deposits starting growing. By the mid-May the total deposits held by the commercial banks reached Rs 649 billion,” Nepal Rastra Bank’s data revealed. The entire fiscal year 2009-11 was spent under the shadows of liquidity crunch though, the deposits with bank had grown steadily at lower pace.
Due to deposit constraints banks are resorting more and more to repos conducted by the central bank and inter-bank transaction to meet their short term liquidity management. By the tenth month the inter bank transaction of commercial banks reached to Rs 297.05 billion compared to Rs 231 billion in the same period last fiscal year. As a result inter-bank rate zoomed up to 10.43 per cent that was around 7.13 per cent last year.
Source: THT
The average deposit growth rate of the commercial banks has slowed down by more than eight and half times in the first 10 months of the current fiscal year compared to same period last fiscal year.
The deposits held by the commercial banks have grown at the pace of 0.265 per cent in the ten months, however, within the same time last fiscal year, it had expanded at an average of 2.273 per cent, according to the data of central bank.
By the first six months of the current fiscal year, the deposits parked at commercial banks constantly dwindled. In the beginning of the fiscal year, commercial banks had Rs 630.6 billion as deposits, the deposit amount held by the class ‘A’ financial institutions went down to Rs 628.7 billion in the first six months losing almost Rs 2 billion of deposit.
The liquidity starved financial sector actually had to let go of 0.31 per cent of its total deposits by mid-January 2011.
The four-month delay in budget take a toll on the deposit collection of the commercial banks that were already competing with mushrooming financial institutions and co-operatives.
The delay in budget stalled flow of funds from government coffer freezing the deposit growth. Similarly, the government funds worth billions stood frozen in the central bank while the financial institutions were gasping for liquidity. Had the budget been on time and government expenditure would have been eased the tight liquidity situation.
Moreover, bad financial standings of many financial institutions did not help much in attracting more deposits from the general public as they were confused. Though, almost all of the commercial banks are steady and firm, the latest fall down of bunch of financial institutions shook the confidence of general public regarding parking their hard earned money in banks.
The first two months of the current fiscal year witnessed deposits slumping by more than Rs 12 billion after that the deposit collection did started to pick up. “However, only after sixth months the deposits starting growing. By the mid-May the total deposits held by the commercial banks reached Rs 649 billion,” Nepal Rastra Bank’s data revealed. The entire fiscal year 2009-11 was spent under the shadows of liquidity crunch though, the deposits with bank had grown steadily at lower pace.
Due to deposit constraints banks are resorting more and more to repos conducted by the central bank and inter-bank transaction to meet their short term liquidity management. By the tenth month the inter bank transaction of commercial banks reached to Rs 297.05 billion compared to Rs 231 billion in the same period last fiscal year. As a result inter-bank rate zoomed up to 10.43 per cent that was around 7.13 per cent last year.
Source: THT
