Kathmandu, June 15

The lending of the banks has almost half as compared to the deposit collection during the eleven months of the current fiscal year.

According to the bankers, the deposit in the banking sector has increased by almost Rs.150 billion during the eleven months of the current fiscal year against its investment stood at only Rs.80 billion.

Rajan Singh Bhandari, vice president of the Nepal Bankers Association said that the widening difference between the deposit and lending of commercial banks could hit the institutions’ profits and the macroeconomic stability in Nepal.

He said that the lending of the commercial banks could not go up as per the ratio of the deposit due to lack of an investment-friendly environment in the country.

Bhandari said that the banks’ lending has stood at 50 per cent as compared to the ratio of deposit collection.

He said that the deposit in the banks reached about Rs. 800 billion where the lending was Rs. 600 billion during the period. As of the end of Asar 2068, the banks’ deposit had been Rs. 650 billion as against Rs. 520 billion lending.

The increment the flows of remittance as well as revive the confident of the people have been contributed to increase the flows of deposit in the banks, he said.

Last year, the banking sector faced a liquidity crunch.

He said that the banks were able to invest additional amounts with an exceeded liquidity. "But there is no additional demand from investors," he said.

"Such a situation is sure to affect the banks’ performances and their profitability," he added.

He said that the banks will have to compel to reduce the interest rates on deposit as the flow of deposit against the lending.

Since the investors are in a ‘wait and see’ situation due to the fluid political scenario, we are awaiting a stable situation for investment, he said.

He, however, said that the present political development will again loose the confident of the investors to invest in the country.