November 23: Commercial banks of Nepal have reported positive outcome in deposit collection to back the central bank’s claim that the economic indicators are improving in the country.

The deposit collection of banks increased in a one month period between mid-October to mid-November due to increase in remittance inflow as well as economic activities during the election.

The deposit collection of 26 commercial banks in Nepal stood at Rs 16.19 billion in the review month, according to the figures released by Nepal Bankers Association.

As per the data of the association, the total deposits of commercial banks which stood at Rs 4.547 trillion in mid-October has increased to Rs 4.563 trillion by mid-November.

The association informed that the deposits withdrawn by the banks’ customers during the festive season has started returning to the banking system from the first week of November.

“The bank deposits were withdrawn in mid-October during the festive season. But they have started returning to the banking system,” said Kiran Kumar Shrestha, CEO of Rastriya Banijya Bank.

He argued that the bank deposits will further rise because the money from the informal sector will pour into the market due to the election.

Nepal Rastra Bank had recently published a report indicating improvement in economic indicators. According to the NRB, the Balance of Payments remained at a surplus in mid-October for the first time in 14 months. Likewise, remittance inflow also increased by 16 percent to Rs 281.5 billion in the first quarter of the current fiscal year.

Although the deposit collection of banks increased in the review period, credit flow has declined.

The total credit flow of banks in the review month stood at Rs 1.26 billion.

The loan portfolio of commercial banks has now reached Rs 4.222 trillion. 

The CD ratio of banks in the review month was 87.19 percent. Although the CD ratio is within the limit set by the central bank, the commercial banks are not able to increase credit flow due to high interest rates.