Fixed deposits exceed savings
KATHMANDU:
The depositors seem to have attracted to fixed deposits compared to the savings deposits due to higher interest rates offered by the banks.
The fixed deposits with the commercial banks have grown steadily in the first eleven months of the last fiscal year while the saving deposit growth rate had slowed down.
The fixed deposit accounts comprised 47 per cent of the total deposits with the commercial bank worth Rs 655.7 billion, in the first eleven months of the last fiscal year.
“Lately, the saving deposits offer interest rate up to 10 per cent while some fixed deposits with longer tenure can yield interest rate as high as 15 per cent giving depositors a good choice compared to savings accounts,” said spokesperson for the central bank Bhaskar Mani Gyanwali. “Interest rate is the main motivating factor for depositors to park their funds,” he added.
The fixed deposits offer higher interest rate compared to savings deposits. The higher interest rates compensate for money getting tied-up with banks for the fixed tenure where unlike saving deposits that allows depositors to withdraw the funds at their preference.
Fixed deposits have become favourite investment instruments for the majority in the current volatile economic situation, whereas the share market investors blame the high interest rates offered on fixed deposits for taking away the share market.
Term deposits are relatively safe investment option that yields higher return in comparison to security investment at present, thus more and more people are opting for parking their funds as fixed deposits, he said, adding that the banks also offer higher interest rates for fixed deposits as they can use the deposited amount for fixed period without worrying about demand for withdrawal. More fixed deposits translate as more credit creation power with the banks. The commercial banks have Rs 344.87 billion by the mid-June 2011 as fixed deposit while the saving deposits with them stands at Rs 226.77 billion, according to the macroeconomic data of the central bank.
In the previous fiscal year 2009-10, fixed deposits with commercial banks stood at around Rs 274.9 billion, while savings deposit stood at Rs 235.4 billion.
The difference between fixed and savings deposits that stood at a mere Rs 39.4 billion in fiscal year 2009-10, has widened to Rs 118.2 billion in the last fiscal year.
The statistics reveal that in the past fiscal year average growth rate of fixed deposits was about six per cent while savings deposit declined by average rate of 1.63 per cent.
Since some time back, financial sector has been plagued by liquidity crunch caused by dwindling deposits in the banks as the deposits were not growing as much as it should have forcing the bankers to scale the interest rate up in order to attract more deposits.
Despite, the rising interest rate, the commercial banks have seen their deposits growing by a marginal 0.26 per cent on average by mid-June while in the corresponding period it had observed 2.27 per cent average growth of the deposits in the commercial banks.
Source: THT
The depositors seem to have attracted to fixed deposits compared to the savings deposits due to higher interest rates offered by the banks.
The fixed deposits with the commercial banks have grown steadily in the first eleven months of the last fiscal year while the saving deposit growth rate had slowed down.
The fixed deposit accounts comprised 47 per cent of the total deposits with the commercial bank worth Rs 655.7 billion, in the first eleven months of the last fiscal year.
“Lately, the saving deposits offer interest rate up to 10 per cent while some fixed deposits with longer tenure can yield interest rate as high as 15 per cent giving depositors a good choice compared to savings accounts,” said spokesperson for the central bank Bhaskar Mani Gyanwali. “Interest rate is the main motivating factor for depositors to park their funds,” he added.
The fixed deposits offer higher interest rate compared to savings deposits. The higher interest rates compensate for money getting tied-up with banks for the fixed tenure where unlike saving deposits that allows depositors to withdraw the funds at their preference.
Fixed deposits have become favourite investment instruments for the majority in the current volatile economic situation, whereas the share market investors blame the high interest rates offered on fixed deposits for taking away the share market.
Term deposits are relatively safe investment option that yields higher return in comparison to security investment at present, thus more and more people are opting for parking their funds as fixed deposits, he said, adding that the banks also offer higher interest rates for fixed deposits as they can use the deposited amount for fixed period without worrying about demand for withdrawal. More fixed deposits translate as more credit creation power with the banks. The commercial banks have Rs 344.87 billion by the mid-June 2011 as fixed deposit while the saving deposits with them stands at Rs 226.77 billion, according to the macroeconomic data of the central bank.
In the previous fiscal year 2009-10, fixed deposits with commercial banks stood at around Rs 274.9 billion, while savings deposit stood at Rs 235.4 billion.
The difference between fixed and savings deposits that stood at a mere Rs 39.4 billion in fiscal year 2009-10, has widened to Rs 118.2 billion in the last fiscal year.
The statistics reveal that in the past fiscal year average growth rate of fixed deposits was about six per cent while savings deposit declined by average rate of 1.63 per cent.
Since some time back, financial sector has been plagued by liquidity crunch caused by dwindling deposits in the banks as the deposits were not growing as much as it should have forcing the bankers to scale the interest rate up in order to attract more deposits.
Despite, the rising interest rate, the commercial banks have seen their deposits growing by a marginal 0.26 per cent on average by mid-June while in the corresponding period it had observed 2.27 per cent average growth of the deposits in the commercial banks.
Source: THT
