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Nepali Banks Face Cash Crunch, Limit Loan Offering

Nepali Banks Face Cash Crunch, Limit Loan Offering

As the reports say, Nepali banks are facing serious liquidity crunch over the last few weeks, stopping them from offering business loans to enterprises.

According to local bankers, the cash crunch is majorly due to high expenditure in the early months of the current fiscal compared to revenue earnings. This is stopping many banks from meeting local businesses’ credit requirements.

According to Nepal Bankers’ Association, deposits in the commercial banks grew by only 3.7 percent compared to lending that saw 7.7 percent rise, leading to credit expansion in line with the regulatory limit.

While the banks are supposed to maintain 80 percent Core Capital combined with Credit To Deposit (CCD) ratio, the number stands at 78 percent giving only 2 percent scope for further lending, informed Nepal Rastra Bank (NRB).

While the government is looking at an 8 percent economic growth target, bankers opine that the continuation of liquidity crunch will hurt the growth of overall economy in the days to come.