Thursday, September 28, 2023

Banks are afraid to invest money in the market in recent situation

According to the banks, the current amount of loanable funds is about 50 crores. Businesses are facing difficulties due to the shortage of funds in the market. However, the banks are not eager to lend more money. The total deposit of banks is 51.53 crores, out of which 48.16 crores is loaned. The loan-to-deposit ratio is 86.54%. The interbank lending rate has been limited to 4.16%, which is less than the upper limit of 8.5%. However, the banks are not expanding their loan business in an aggressive manner. The president of Nepal Bankers’ Association and the CEO of Nepal Bank Limited stated, “Banks are still cautious and observant.”

The banks are currently facing difficulties in loan repayments. The National Bank has limited the amount of loan repayment to 11 arba rupees. Banks have now received equal amounts from the National Bank, which will be returned to the National Bank. Banks are still in a comfortable position for loan repayment, although banks have not increased their loan repayment. In the past, banks had a rise in bad loans, but they have become more conscious of increasing loan repayments.

In the past, banks were more cautious about increasing their bad loans and they also became more aware of the need to grant more loans. As bad loans increased, banks also started taking more precautions to manage risks, but even now banks are not granting loans in a free manner. Some banks are limiting the increase in loans based on the risk of their assets and primary capital, but others are not.

Banks limit the primary deposit based on the risk assets, meaning they cannot increase the limit beyond a certain percentage, usually 8.5%. When the risk assets increase, the burden of bad loans also increases.

Recently, the National Bank has been reducing loan interest rates. This is because the demand for loans has decreased. The National Bank has decided to only provide loans to businesses at a rate of 20-40% of the business’s income.

According to the officials of the National Bank, the banks have started to provide loans without any limit, but to prevent bad loans, they have started providing loans at a limited rate. This system has changed compared to the previous system, but the demand for loans has still decreased. This is why the National Bank’s efforts to reduce loan interest rates are ongoing.

The government has increased borrowing from the national bank and the national bank has increased the interest rate on loans. The national bank has directed the interest rate to be based on the difference between the interest rate set by the central bank and the interest rate set by commercial banks. Currently, the maximum interest rate is 8.5% with an upper limit of 4.16% set by the central bank. The national bank aims to reduce the interest rate on loans taken by the government, but so far the money has not been collected from the banking system. Some time ago, the interest rate on loans taken by the government was increased by two decimal points. “There has been a strategy to decrease it, but it hasn’t happened yet,” according to the research department of the national bank.

Comment Here


Please enter your comment!
Please enter your name here

Related Articles

Must Recent

An opportunity came to open the Bhrikuti paper factory, which had been idle for...

Chitwan, Bhrikuti Pulp and Paper Limited is a paper factory built in the year 2042 BS with the help of the Chinese government. Although initially...

Repeated abuse of electric business by Nepal Police

Repeated misuse of electric business by police After the incident, Rk Adipt Giri has been accused of cyber crime. Six journalists have raised the issue of...

Calcium deficiency-linked bone loss and minor injuries contribute to fractures, not officially a disease

Bone loss is caused by calcium deficiency. Back bends, hunchbacks, small injuries often lead to broken arms and legs. But it is not considered...

Doctor Shraddha Shilpkar of Ishan Hospital arrested in fake certificate case

Doctor Shraddha Shilpkar of Ishan Hospital arrested in fake certificate case The Central Bureau of Investigation (CIB) has arrested one more doctor in the fake...

Spain in the semi-finals of the FIFA Women’s World Cup for the first time

Spain reached the semi-finals of the FIFA Women's World Cup 2023 after defeating former runners-up Netherlands. In the first quarter-final match on Friday, Spain won...