Commercial banks deposit starts look up
KATHMANDU: The interest rate seem to come down as deposit mobilisation of the commercial banks start to look up.
The deposit mobilisation of commercial banks has increased by Rs 16.66 billion in the second month of the fiscal year, according to macroeconomic report released by Nepal Rastra Bank (NRB).
The deposits have increased to approximately Rs 701.8 billion in one month from Rs 688 of the first month. In corresponding period last fiscal year, the financial market has witnessed deposits declining by 1.82 per cent while this time they have recorded 2.7 per cent increment.
As the deposits had started to grow with the commercial banks, the inter bank lending and interest rate have also getting deflated. Inter-bank transaction during the second month of the current fiscal year has reached Rs 23.66 billion while inter-bank lending stood at Rs 46.48 billion during first month.
The comfortable deposit situation had brought down short-term interest rates in the second month, according to the report.
The weighted monthly average 91-day Treasury bill rate stood at 2.28 per cent in the second month of 2011-12 compared to 3.77 percent in the corresponding period of the previous year. Similarly, the weighted average inter-bank rate remained at 1.3 per cent in the first month of 2011-12 compared to 3.24 per cent in the last year.
Last fiscal year, the deposits in the commercial banks grew by only 10 per cent while in the year before deposits have grown by 12.9 per cent, according to the unaudited fourth quarter financial reports of the commercial bank for the last fiscal year. The deposit growth rate had slowed down since last two fiscal years due to deepening liquidity crisis in the banking sector. In the fiscal year 2008-09 deposits with commercial banks had surged by 32.25 per cent. The slowing growth rate of deposits with the commercial bank was evident as last year deposits grew by Rs 57 billion opposed to expansion of deposit base of the commercial banks by Rs 72 billion in the year before.
The commercial banks had increased deposit interest to attract more deposits that, in turn, has raised the lending interest rate to about 20 per cent. The sky-rocketing lending rate contracted the loans floated by the commercial banks as investors are apprehensive about borrowing at such high cost.
So loans and advances of the commercial banks during the review period have increased by Rs 9.98 billion to Rs 528.7 billion in comparison to last fiscal year’s corresponding period when lending rose by Rs 10.58 billion, according to the central bank’s report.
Source: THT
