August 22: Bank deposits declined by more than Rs 100 billion in the first month of the current fiscal year.

According to the Nepal Bankers Association, the total deposits of commercial banks in the last month of Fiscal Year 2021/22 stood at Rs 4541 billion, which dropped to Rs 4433 billion due to withdrawal of Rs 108 billion in the Nepali month of Shrawn (mid-July to mid-August).

Bank deposits had increased by Rs 150 billion in the month of Asar (mid-June to mid-July) but the deposits started declining continually the very next month.

Bank deposits declined by Rs 64 billion in the third week of July followed by withdrawal of Rs 28 billion in the third week. Likewise, bank deposits declined by Rs 4 billion in the first week of August and by Rs 25 billion in the second week followed by a decline of 13 billion the next week.

Nepal Rastra Bank’s Spokesperson Dr Gunakar Bhatta believes that the bank deposits declined in the review month because the state-owned Nepal Oil Corporation paid its long-standing debt to the Indian Oil Corporation during the beginning of the new fiscal year and the construction companies also withdrew the amount deposited in their names by the government.

Bhatta believes that the amount will slowly return back to the banking system.

The NOC had borrowed Rs 16 billion from the government and paid its dues to the IOC in the third week of July.

The central bank also estimates that the bank deposits declined in the first month of the current fiscal year because the unspent budget of the local levels were returned back to the state coffers.

Although the bank deposits declined, credit flow of banks have increased nominally during the review period.

The total credit flow of banks in the last month of FY 2021/22 was Rs 4175 billion which increased to Rs 4177 billion by mid-August.