Banks may face liquidity problem
KATHMANDU:
Commercial banks having excess liquidity in the beginning of this fiscal 2014-15 may face a tight liquidity situation due to slow deposit growth against loan mobilisation in the second quarter as the average credit deposit ratio, popularly known as CD ratio, has grown by two percentage points in this period.
“Average CD ratio, which was around 75 per cent at the end of first quarter of this fiscal is now at about 77 per cent,” Bhuwan Dahal, CEO of Sanima Bank and executive member of Nepal Bankers’ Association (NBA), said citing the recent data.
As per Nepal Rastra Bank’s provision, banks need to maintain CD ratio of up to 80 per cent, but a majority of banks seem to be in a tight situation though the average ratio shows some space to expand loans.
The government-run Rastriya Banijya Bank (RBB) and Nepal Bank Ltd (NBL) have been maintaining CD ratio of less than 65 per cent, though the average CD ratio of the industry stood at around 77 per cent. The government-run Agricultural Development Bank is also in a tight situation.
“Apart from the government-run banks, a majority of banks were able to come closer to the limit of 80 per cent,” said Dahal.
The largest deposit mobiliser RBB, which had deposits of Rs 103 billion till the end of this December, has said that the bank will maintain its CD ratio below 70 per cent because it has been mobilising deposit of about Rs 10 billion of pension, social security and other government funds that could be withdrawn any time, as per Krishna Prasad Sharma, CEO at RBB.
It is reported that as the largest deposit mobiliser will maintain its CD ratio below 70 per cent, there will not be a crunch of liquidity itself.
The total local currency deposit of the banks in first quarter of this fiscal stood at Rs 1,163 billion against loan mobilisation of Rs 960 billion and the total net worth of 30 commercial banks stood at Rs 131.63 billion.
In this period, banks enjoyed foreign currency deposit equivalent to Rs 90 billion.
Source: THT
