Low govt spending led to Rs 27.88b cash reserve

KATHMANDU, JUL 22 -

The government’s failure to spend well in the last fiscal year 2012-13 resulted in cash reserve of Rs 27.88 billion at Nepal Rastra Bank. The government maintains its account in the central bank .

The government expenditure remained poor due to the delay in budget presentation last fiscal year, which ultimately hit the economy hard.

Reviewing the economic situation of the country, the central bank mentioned in its monetary policy document that the government expenditure last fiscal year grew by 4.2 percent to Rs 333.37 billion. Revenue collection, too, saw a growth of 21.1 percent to Rs 295.91 billion. As far as the external sector of the economy is concerned, despite poor results in initial months of the fiscal, the balance of payment (BoP) surplus is expected to remain at a higher level. NRB Governor Yubaraj Khatiwada said it is estimated to remain at a surplus of over Rs 70 billion.

Though the government incurred heavy losses in the goods business, it became successful in saving Rs 41.56 billion in the first 11 months of the FY 2012-13 due to savings made through the service and transfer business. Balance of Payment (BoP) surplus in the same time frame stood at Rs 52.69 billion. “The BoP is estimated to exceed Rs 70 billion at the end of the last fiscal year,” said NRB Governor Yuva Raj Khatiwada. The BoP surplus in the previous fiscal year was Rs 127.7 billion.

On the development in the bank ing sector, the credit to deposit ratio of commercial bank s remained healthy at 71.7 percent. The average spread rate of interest in the last fiscal year remained at 7.1 percent, which the central bank thinks is higher than the required. This is the reason the monetary policy unveiled on Sunday announced keeping the spread rate at 5 percent.

There has also been a significant progress in the consolidation process in the bank ing sector, according to the NRB. After the implementation of merger guidelines on April 2011, as many as 43 bank s and financial institutions have so far merged to form 18 entities. Also, 13 BFIs principally agreed to form five new institutions last FY. Likewise, two commercial bank s—NIC Bank and Bank of Asia Nepal—merged in the first of its kind of successful mergers last FY.  

BFI numbers go down

With mergers going on, the number of bank s and financial institutions and micro-finance institutions reduced by six in the last fiscal year. At the end of the last fiscal, the number of A, B, C and D class financial institutions decreased to 207 from the previous fiscal’s 213.

Likewise, in the fiscal year 2012-13, the number of branches of commercial bank s was 1,486, up from the 1,425 in the previous fiscal. The branches of development bank s increased to 764 from the earlier year’s 687. The branches of finance companies decreased to 242, down from 292, thanks to mergers. Branches of micro-finance institutions also increased to 634 from 550.

As of FY 2012-13, there are 31 commercial bank s, 86 development bank s, 59 finance companies and 31 micro finance companies.

According to the central bank , a BFI branch is serving around 8,475 people. There are 11.1 million deposit accounts in commercial bank s, development bank s and finance companies. The number of those taking loans is 845,000.

Source: The Kathmandu Post