KATHMANDU (XINHUA) — The Nepali banking sector has been facing liquidity crunch over the past few months and commercial banks have started stopping large loans.
“We have been providing loans worth up to 1.5 million Nepali Rupees (14,439 U.S. dollars) in the recent days due to the lack of enough fund for lending,” Bhuvan Dahal, a chief executive officer of Sanima Bank, one of the commercial banks, told Xinhua on Sunday.
“As far as I know, most of the banks have stopped providing large-scale loans now,” the chief executive officer said.
Data from Nepal Bankers’ Association (NBA), the grouping of commercial banks, corroborated Dahal’s statement. Since last two months, the overall inflow of lending has also slowed along with deposits.
According to NBA, deposit and credit growth during the period from mid-July last year to mid-February this year stood at 15.77 percent and 19.85 percent, respectively. This suggests the sluggish growth of both deposit and credit in the last two months.
Himalayan Bank Chief Executive Officer Ashoke Rana also said that they were providing loans selectively in recent days. “As deposit collection is dismal, providing loans as we like is difficult,” he told Xinhua.
However, Nepal’s central bank said the situation is not as bad as it has been made to look.
“The banks lent recklessly in the initial months of the current fiscal year,” an official of the bank said.
“Current situation will force the banks to be more responsible and provide loans only to quality customers and to the productive sectors,” the official added.
