NRB's macro-economic report: Banks’ lending growth slows

KATHAMNDU, OCT 27 -

Commercial banks are enjoying excess liquidity with recent surge in deposits, but their lending has slowed down. With suppressed credit demand, banks’ lending increased by only 1.5 percent in the first two months of the current fiscal year, according to Nepal Rastra Bank (NRB)’s latest macro-economic report.

According to the report, banks’ lending to the private sector declined by Rs 2.45 billion. Their lending to the manufacturing sector increased by a meagre Rs 190 million in first two months of 2011-12, against Rs 1.97 billion in same period last year. Likewise, lending to retail and wholesale sectors plunged by Rs 1.25 billion.

Thanks to the rise in remittance inflow, the country’s balance of payments (BoP) recorded a surplus of Rs 17. 27 billion in the first two months this year, against a deficit of Rs 5.90 billion in the same period last year. According to NRB, the improvement is due to the rise in remittance inflow and progress in service accounts.

According to NRB, Nepal received remittance worth Rs 47.32 billion, recording a healthy growth of 24.9 percent, over the period. Last year, remittance growth was limited to 8.3 percent only.

The NRB report shows inflation at 8.5 percent, which is lower than that in the same period last year. Low growth in food and beverage prices helped keep the inflation moderate.

During the review period, the index of food and beverage group increased by 10.1 percent and that of the non-food and service group increased 7.2 percent. The indices had increased by 12.2 percent

and 5.6 percent, respectively, in the same period last year.

Under the food and beverage group, price index of vegetables sub group went up by a staggering 49.1 percent, against the moderate rise of 1.4 percent last year. Likewise, the index of fruit and ghee and oil sub groups increased by 38.4 percent and 10.2 percent, respectively.

Under non-food and services group, the price index of clothing and footwear increased by 13percent in the review period compared to an increase of 10.4 percent in the same period of the previous year.

There has been impressive growth in the country’s export over the review period. The NRB says export increased by 16.9 percent to reach 12.48 billion in the first two months. Last year, exports had declined by 3.6 percent.

Source: Kantipur