In the wake of favorable climate, banks start mobilizing more loans
ShareSansar, December 10:
The commercial banks, which had not been able to invest owing to political instability and the falling price of Nepali currency against the US dollar in the first three months of the current fiscal year, have gradually started to mobilize more loans over the recent days.
By the last week, 31 commercial banks of the country have mobilized Rs 10.73 arba in deposit and Rs 7.93 arba in loan, which means that there loan-deposit ratio has crossed 73 percent.
However, the hope of political stability in the country after November 19 the Constituent Assembly election and the consolidation of the local currency against the greenback is seen as conducive for the investment climate in the country.
“More investors are now willing to expand their investment portfolio following the election,” says CEO of Civil Bank Limited Kishor Maharjan.
Over the recent days, the banks and other BFIs have also been increasing retail loans.
Share loan propels market
To effectively manage their portfolio, the BFIs have also been increasingly attracted to the share market while individual investors are also turning to the scrip, owing to the move of the BFIs to slash interest rate in the face of surplus liquidity in the system.
Likewise, BFIs are issuing more and more share loans, which has further boosted the share market, which has been skyrocketing –the NEPSE index itself has surged by meteoric 100-plus levels since the CA election.
“While inflation stands 8 percent, the interest rate of a 19-day treasury bill of the central bank is merely 0.1 percent,” says analyst Parshuram Kuwar Chhetri. “No wonder the share market is the sector which offers best returns.”
Even the state-run banks such as Nepal Bank Limited are offering share loans.
Those keeping a close tab on the market say that if the BFIs start to issue more share loans at the current rate then the central bank might step ahead to intervene to stop the market from growing at an unnatural rate.
