December 16: Deposit collection of commercial banks has improved in the past one month. The flow of loan has also increased, according to Nepal Bankers Association (NBA).

The association informed that the deposit collection of 27 commercial banks increased by Rs 46 billion in the month of Mangsir (mid-November to mid-December). The total deposits of the commercial bank currently stands at Rs 3,694 billion.

Deposit collection in the month of Kartik (mid-October to mid-November) was in deficit by Rs 6 billion. Banks have recently lowered the interest on deposits after lowering the rate of interest on loans. Experts believe that deposit collection might have become negative due to the lowering of interest rate.

However, chairman of Nepal Bankers Association Bhuvan Kumar Dahal says it is not because of the low interest rate that the deposit collection slumped. He says the negative deposit collection is a result of decline in remittance and increase in imports.

“The rate of inflation is still hovering around 4 percent at present. The rate of interest that the banks provide to savings accounts should be similar to the rate of inflation. Most of the banks have fixed the interest rate for general savings account at more than 4 percent. Some even provide 5 percent interest,” said Dahal.

The association informed that both deposit collection and flow of loans have improved in the review period.

The flow of loan in the month of Mangsir has reached Rs 49 billion while the total loans given out by the banks stands at Rs 3101 billion, informed Dahal. This is an increase compared to the previous month.

The flow of loan in the month of Kartik (mid-October to mid-November) was Rs 17 billion.

Chairman Dahal says that financial activities have increased after Tihar festival. He says that the banks’ customers are increasingly opening Letter of Credit (LC) while the transactions are also increasing.