BFIs deposits surge to Rs 7.26 trillion, signaling renewed confidence in Nepal’s economy

KATHMANDU: Total deposits in Nepal’s banks and financial institutions (BFIs) have climbed to a historic high of Rs 7.26 trillion in FY 2024/25, underscoring a steady recovery in public confidence, improving liquidity conditions, and the deepening role of digital finance in the economy.

Data show a consistent upward trajectory in deposits over the past seven years, reflecting both structural changes in household financial behavior and gradual macroeconomic stabilisation.

According to the figures, total deposits stood at Rs 3.23 trillion in FY 2018/19. Despite the economic disruption caused by the Covid-19 pandemic, deposits continued to rise, reaching Rs 3.84 trillion in FY 2019/20 and Rs 4.66 trillion in FY 2020/21.

The growth momentum strengthened in the post-pandemic period. Deposits increased to Rs 5.08 trillion in FY 2021/22, followed by Rs 5.71 trillion in FY 2022/23 and Rs 6.45 trillion in FY 2023/24. The latest figure of Rs 7.26 trillion in FY 2024/25 confirms a sustained expansion of the formal financial system.

Rising trust in the banking system

Economists view the steady rise in deposits as a key indicator of renewed public trust in Nepal’s banking sector after a period marked by economic slowdown, real estate stress, and weak credit demand.

“The consistent growth in deposits suggests that households and businesses are increasingly parking their savings in formal financial institutions rather than holding cash or informal instruments,” said a senior banking analyst.

The deposit expansion also reflects a shift in consumer behavior toward financial prudence, as households prioritise savings amid global uncertainty and domestic economic restructuring.

Digital transactions transforming savings behavior

A major driver behind deposit growth has been the rapid expansion of digital payment systems and mobile banking services, which have fundamentally changed how Nepalis manage their money.

The widespread adoption of mobile wallets, QR payments, internet banking, and real-time fund transfer systems has made formal banking more accessible, even in semi-urban and rural areas.

Bankers say digital convenience has encouraged customers to maintain higher account balances, as transactions have become faster, safer, and more transparent.

“Digital banking has reduced the need to hold physical cash. People now keep their money in banks because payments, transfers, and bill settlements can be done instantly through mobile apps,” said a commercial bank executive.

This digital shift has widened the deposit base, drawing in younger consumers, migrant workers’ families, and small entrepreneurs who previously relied on cash-based transactions.

Remittances and formalisation of the economy

Another major contributor to rising deposits is the continued inflow of remittances through formal banking channels.

With stricter regulation of informal transfer systems and improved digital remittance platforms, a larger share of foreign earnings is now entering the banking system directly, strengthening deposit growth.

At the same time, government efforts to expand financial inclusion and digitalise public services have helped formalise economic activity, increasing the flow of money through regulated financial institutions.

Implications for credit growth and economic recovery

The expanding deposit base is critical for Nepal’s broader economic recovery, as deposits are the primary source of funds for bank lending.

Improved liquidity positions BFIs to lower interest rates, expand credit to productive sectors, and support private investment, which is essential for reviving growth momentum.

However, bankers caution that deposit growth must be matched by healthy credit demand to ensure efficient financial intermediation.

While liquidity has improved, lending growth has remained moderate due to weak investment appetite in sectors such as real estate and construction.

Indicator of macroeconomic stabilisation

Analysts also see deposit growth as a macroeconomic signal that Nepal is moving toward greater stability after years of external sector pressure, high inflation, and slowing growth.

The rising deposit trend indicates that households feel more secure about the future and are willing to commit savings to the formal financial system.

In this sense, the deposit trajectory tells a broader story of Nepal’s economic rebalancing, from a cash-heavy, informal structure toward a more digitised and institution-based financial ecosystem.

Structural shift in financial behaviour

The long-term upward trend from Rs 3.23 trillion in 2018/19 to Rs 7.26 trillion in 2024/25 reflects a structural transformation in how Nepalis save, transact, and engage with banks.

The combination of digital finance, remittance formalisation, and improved banking outreach has permanently altered consumer financial habits.

As Nepal pushes ahead with digital economy reforms, experts expect deposits to remain on a growth path, provided macroeconomic stability is maintained and confidence in the banking system continues to strengthen.

The deposit surge is therefore not merely a banking statistic, but a key marker of Nepal’s gradual economic normalisation and financial modernisation.