Rastriya Banijya Bank Liquidity: Deposit of Rs. 124 billion & Lending of Rs 75 billion

Rastriya Banijya Bank Limited (RBBL) is hot topic in the capital market of Nepal.  As RBBL gears up for the public offering of its shares worth 2.57 arba, the scrutiny has increased. RBBL is under microscope as investors are gathering every detail about the bank's fundamentals. One of the concerns is that the bank has the higher liquidity as the deposits remain at Rs 124 billion while lending stands at Rs 75 billion. We have put this query regarding liquidity to the CEO of the bank, Mr. Krishna Prasad Sharma. This is what he has to say about the liquidity of RBBL:

"The Nepal Rastra Bank has put a lending ceiling at Rs. 80 billion for Bank and Financial Institutions. As far as RBBL is concerned we do not want to hit that ceiling. As we have wide network, government business we need to stay liquid to suffice all our customer needs. In context of Nepal, at present the market is liquid because the return from inter-bank market is comparatively low. If there are promising and feasible projects, we are ready to absorb more liquidity from market to invest in lucrative projects. Besides, higher liquidity can act as a shock absorbing mechanism although we are not expecting a crisis as of now. Furthermore, during past liquidity crisis we did not face any problem due to our state of higher liquidity. As a government bank we have also rescued other banks in the past.  We also do not have any additional cost burden to maintain higher liquidity. Overall, we prefer higher liquidity compared to other banks."