Banks sit on Rs1.56 trillion in excess liquidity as weak credit demand persists
Summary
Banks in Nepal are holding Rs1.56 trillion in excess liquidity due to weak credit demand and slow economic activity, despite robust deposit growth from remittances.
Key Points
- Banks and financial institutions in Nepal have Rs1.56 trillion in excess lendable funds as of July 10 due to weak loan demand.
- The credit-to-deposit ratio stands at 71.29%, below the permitted lending limit of 90%.
- Excess liquidity has increased over the fiscal year fueled by steady deposit growth driven by remittance inflows.
- Experts link low credit growth to subdued market demand, slow economic activity, and underutilized industrial capacity.
