Loan Disbursement Increased

Banking Khabar/ Loan disbursements by banks have begun to rise. The increase is attributed to a flexible monetary policy and declining interest rates. According to data from the central bank, loan investment by banks began to grow in the month of Bhadra. By the end of Shrawan, loan disbursements amounted to NPR 5.171 trillion, and by 11th Bhadra, this figure had risen to NPR 5.189 trillion.

The central bank’s data reveals that NPR 18 billion in loans were disbursed within the first 11 days of Bhadra alone. Among the total loans disbursed by 11th Bhadra, commercial banks accounted for NPR 4.591 trillion, while other banks and financial institutions provided NPR 500 billion 970 million in loans.

According to the data, total deposits have reached NPR 6.457 trillion, of which NPR 5.731 trillion is held by commercial banks, with the remaining NPR 726 billion deposited in other development banks and financial institutions. The credit-to-deposit (CD) ratio stands at 78.96%.

As per this ratio, banks have approximately NPR 625 billion available for investment. The central bank introduced a cautiously flexible monetary policy this fiscal year to stimulate the economy.

In the past, the target for loan expansion to the private sector was set at 12.5%, though actual disbursement had often been less than half of this. Along with expanding credit, the central bank also lowered the policy rate by 0.5 percentage points, providing a basis for banks and financial institutions to reduce interest rates further.

Following the monetary policy, banks and financial institutions reduced deposit interest rates by about 0.5 percentage points for the month of Bhadra. As deposit interest rates gradually decline, the average interest rate on loans has dropped to single digits.