Kathmandu, Sept 26: Bank lending has started to improve, with commercial banks extending nearly Rs 63 billion in additional credit in Bhadra, according to Nepal Rastra Bank data.
Total lending by 20 commercial banks reached Rs 5.350 trillion by the end of Bhadra in the current fiscal year 2083/84, up from Rs 5.287 trillion at the end of Shrawan.
Fifteen of the 20 commercial banks expanded their loan portfolios during the month, while five recorded declines.
Global IME Bank posted the largest increase, extending an additional Rs 16.19 billion in loans. It was followed by Laxmi Sunrise Bank with Rs 10.31 billion, Kumari Bank with Rs 7.65 billion and Everest Bank with Rs 7.64 billion.
In contrast, lending by NIC Asia Bank, Sanima Bank, Rastriya Banijya Bank, Prabhu Bank and Nepal Investment Mega Bank declined compared with earlier levels.
Bankers view the rise in lending as a possible sign that the banking sector’s prolonged excess liquidity could gradually ease.
Nepal Bankers’ Association President Santosh Koirala said credit growth during the first two months of the fiscal year suggests that excess liquidity could begin to decline. He said demand for loans from the private sector has recently picked up and could help absorb surplus liquidity if the trend continues.
Koirala attributed improving credit demand to political stability, improving economic policies and low interest rates.
However, the latest growth is not exceptional when compared with previous periods. Credit demand normally increases ahead of major festivals such as Dashain and Tihar.
Banks extended around Rs 51 billion in credit in Bhadra last year, while monthly lending exceeded Rs 100 billion in Poush.
Credit growth had remained weak last fiscal year. Despite Nepal Rastra Bank setting a 12 cent credit growth target for 2082/83, actual growth was limited to around 6.5 per cent.
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