Bank deposits decreased from Rs 4.269 trillion to Rs 4.233 trillion over the same time, according to the Nepal Bankers’ Association (NBA). Similarly, the loan amount climbed from Rs 3.998 trillion to Rs 4.034 trillion, representing a 4% increase in value.
Currently, Nepal’s banking system is suffering from a severe shortage of loanable funds as a result of an excessive amount of loans being issued and a poor rate of deposit collecting. According to the Nepal Rastra Bank, as a result of this, the credit-deposit ratio of the vast majority of banks has now exceeded the legally mandated maximum of 90 percent.
While the banks have been considering raising their interest rates, the Nepal Rastra Bank has interfered immediately, stopping the institutions from making such a move. Analysts have sharply criticized the central bank’s decision, claiming that by fixing interest rates, the regulator will cause Nepal’s banking sector to lose confidence in the international financial market.