September 6: Deposit collection of banks has improved due to their fixed deposit schemes as well as the upcoming festive season. According to Nepal Bankers’ Association, bank deposits increased by Rs 11.3 billion in the first week of September.

According to the association, the total deposits of commercial banks was Rs 4426.16 billion as of August 26 which increased to Rs 4437.45 on September 2. Although the bank deposits declined in the third week of August, they have increased since the fourth week of August.

Bank deposits declined by Rs 7.72 billion in the third week of August.

After their failure to attract deposits amid financial crisis, banks have launched various schemes including ten times the principle amount to attract deposits. As the banks were under pressure to increase deposits, they unveiled fixed deposit schemes offering ten times the principle amount in 21 years. Besides the high interest rate, such schemes also offer insurance coverage, credit card, easy loan among other facilities.

The attractive schemes of banks have played a positive role in increasing deposits.

President of Nepal Bankers Association Anil Kumar Upadhyay says that banks were under pressure to increase deposit collection and therefore they announced various schemes.

Another reason for increase in bank deposits is believed to be the festive season. During the festive season, Nepalis working abroad send money back to their homes. As a result, bank deposits increase along with economic activities during this time of the year.

Speaking at a public programme on Saturday, Nepal Rastra Bank’s Governor Maha Prasad Adhikari had said that the overall economy is improving due to the increase in inflow of remittance.

Remittance inflow during the last fiscal year stood at Rs 1007.31 billion.
With the increase in bank deposits, banks have also increased credit flow.

In the first week of September, banks disbursed loans of Rs 167 billion from Rs 130 billion a week ago.

Credit flow of banks, which was Rs 4,177 billion till mid-August increased to Rs 4,181 billion as of September 2.

The CD ratio of banks also declined after the deposit collection exceeded credit flow. The average CD ratio of banks dropped to 88.25 percent on September 2 from 88.42 percent on August 26.