Trading sector consumed 25% of bank loans in 2013/14: NRB

KATHMANDU, Sept 16:

Wholesale and retail trade sector enjoyed one-fourth of the total credit issued by banks and financial institutions (BFIs) in 2013/14, Nepal Rastra Bank (NRB) said in its recent report.

Out of Rs 177.8 billion credit disbursed by BFIs in 2013/14, Rs 45.9 billion was issued to wholesalers and retailers.

The trend of credit mobilization in trading sector has been increasing with every passing year. In 2011/12, BFIs had issued Rs 20.8 billion to wholesalers and retailers. The amount increased by 77 percent to Rs 36.9 billion in 2012/13. In 2013/14, it increased by 24.39 percent to Rs 45.9 billion.

“Of the Rs 900-billion loan portfolio of 30 commercial banks, more than Rs 250 billion is related to Letter of Credit (import financing),” Kishore Maharjan, CEO of Civil Bank Ltd, told Republica.

Production sector is second largest recipient of credit, while construction sector stood in the third position. Production sector mainly covers manufacturing sector and processing plants, among others. Credit flow to the manufacturing sector, however, dropped by Rs 2.1 billion to Rs 32.1 billion in 2013/14, compared to 2012/13, the report states.

Manufacturing sector consumed 18.1 percent of the total credit issued by BFIs in 2013/14.

Loan flow to construction sector increased significantly in 2013/14 compared to the previous fiscal year. BFIs extended loans amounting to Rs 23.5 billion to the construction sector in 2013/14 which is a rise of 74.07 percent compared to Rs 13.5 billion issued in 2012/13. BFIs had extended loans worth Rs 7 billion to the sector in 2011/12. Loan flow to the sector had grown by 92.85 percent in 2012/13.

Similarly, credit flow to the service industry has nearly double in three years. Service sector had received loans worth Rs 8 billion in 2011/12. It nearly doubled to Rs 15.8 billion in 2013/14.

Credit flow to agriculture sector has also been increasing steadily. The sector received total loans worth Rs 10.5 billion from BFIs in 2011/12. It increased to Rs 11 billion in 2012/13 and Rs 11.1 billion in 2013/14.

BFIs extended Rs 8.1 billion on consumer loans in 2013/14. Similarly, total loans to finance insurance and fixed assets stood at Rs 3.4 billion in 2013/14.

Transportation equipment production & fitting sector received credit of Rs 6 billon in 2013/14. Credit flow to this sector was almost nil till 2011/12.
 
Likewise, loans flow to transportation, communications & public services stood at Rs 1 billon

Source: Republica