CD ratio of banks stands at 88.33 % due to aggressive lending

Credit crunch looms as commercial banks grapple with liquidity mismatch

KATHMANDU: Credit to deposit (CD) ratio of banks and financial institutions (BFIs) has stood 8at 8.33 thus far as commercial banks aggressive lending kicked off in the backdrop of volatility deposits.

According to the Nepal Rastra Bank (NRB) data, the CD ratio stood at 88.33 on August 25 up from 88.23 read on August 21. The ratio went up right after the commercial banks took a stride for the aggressive lending spree when the financial market bore the volatility in the deposit over the last few weeks.

The Nepal Bankers Association (NBA) data showed the deposit dropped by Rs 29 billion in the span of July 29 to August 12 and had increased by Rs 12 billion on August 16. However, it again spiraled down by Rs 7 billion as of August 19.

Meanwhile, the lending climbed steadily by Rs 14 billion straight for the three weeks from mid-August.

Though the deposit persistently fluctuated over the weeks, the improvement in surplus liquidity in the central bank gave some signal of relief from the stress in liquidity.

According to the Deputy spokesperson of NRB, Narayan Prasad Pokhrel, the surplus liquidity fluctuated around Rs. 17 billion in this week. He said that the surplus liquidity improved over the week.

Fiscal Nepal |
Sunday August 28, 2022, 02:14:43 PM |

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