Deposit growth outpaces credit, pushing lending rates lower
Summary
Deposits at banks and financial institutions grew much faster than private-sector credit in the last fiscal year, widening liquidity in the banking system and pushing lending rates lower. Nepal Rastra Bank absorbed large amounts of excess liquidity through monetary tools as deposit rates and lending rates both declined.
Key Points
- Deposits at banks and financial institutions rose 13.9% to Rs. 8,276.93 billion, while private-sector credit grew only 6.5% to Rs. 5,857.06 billion.
- The shift in deposit composition moved sharply toward savings accounts, while fixed deposits fell in share.
- Credit growth remained uneven across sectors, with construction, consumable goods and transport rising, but agriculture credit declining.
- Nepal Rastra Bank absorbed heavy liquidity through deposit collection auctions, the Standing Deposit Facility and NRB bonds, while lending rates fell across banks and financial institutions.
