Bank deposits surge to 426b

Total deposits held by the country's 25 commercial banks recorded an astonishing Rs 100 billion (around US$ 1.43 billion) rise in fiscal year 2007/08. Deposits stand at Rs 426 billion (US$ 6 billion), thanks to continued strong growth in remittance income.

Growth in deposits recorded at almost 31 percent was the highest in Nepal's recent financial history. The total amount of deposits equals more than half the national economy, which was worth Rs 720 billion (US$ 10.5 billion) in mid-July 2008.

In addition to the whopping increment in remittance, Dr Shankar Sharma, former vice chairman of the National Planning Commission, says the banking system has started receiving returns on the investment the government made in rural areas, helping to inflate the size of bank deposits.

Nepal received a hefty Rs 142.7 billion (around US$ 2.03 billion) worth of remittance during the last fiscal year, which was equal to 20 percent of the total size of its national economy. Though Nepal has officially permitted 1.4 million people to work overseas, it is estimated that there are altogether two million migrant workers sending remittances to their loved ones back home.

Nepal Rastra Bank's annual report reveals that the troubled state-owned Rastriya Banijya Bank (RBB) continues to remain the largest bank in terms of deposit mobilization, followed by semi-public Nepal Bank Limited (NBL) and privately-owned Nepal Investment Bank (NIB).

According to available figures, RBB holds deposits worth Rs 58 billion, almost 14 percent of the total deposits, while NBL and NIB hold Rs 41.4 billion and Rs 34.5 billion respectively.

In terms of instruments of deposit, savings accounts, which are popular among the middle class, continued to absorb the largest chunk with Rs 211.4 billion -- around half of total deposits -- while fixed deposits accounted for Rs 88.8 billion.

Similarly, extension of loans and investments also witnessed a massive rise of 34 percent to Rs 374 billion (around US$ 5.37 billion) during the last fiscal year. Loan extensions to the private sector, which absorbs 77 percent of total banking loans, grew by an impressive 31 percent.

As a result of substantial increment in deposit mobilization compared to the flow of loans, the total liquid assets of commercial banks ballooned to a record Rs 66.8 billion, whereas the figure last year was Rs 43.3 billion.
Source: eKantipur