Kathmandu. Credit flow of commercial banks has increased by Rs 59 billion as of October 7. <\/p>\n
The total credit of commercial banks has increased from Rs 53.51 trillion till the end of September 2020 to Rs 54.10 trillion. According to the latest data, although banks continued to extend credit in the first 23 days of September, the demand for loans has not increased as expected during the festive season. <\/p>\n
As of October 1, the credit expansion of commercial banks was Rs 38 billion, which has increased by another Rs 21 billion in the subsequent days. This shows that the pace of credit expansion has increased in the last period of September. However, the situation is not as expected that economic activity will increase in the market targeting Dashain and Tihar, and businessmen will take more loans for business expansion. <\/p>\n
The credit flow of commercial banks has fluctuated in the last few months. In August last year, the credit flow of banks had decreased by Rs 2 billion. Loans that had increased by Rs 61 billion in August have been expanded by another Rs 59 billion by October 23. Although the credit flow has improved, it indicates that there is still a gap between the pace of credit expansion of banks and the expected economic activity in the market. <\/p>\n
This year’s credit expansion has been relatively weak compared to the previous year’s September. Commercial banks had extended loans by Rs 56 billion in October 2081 and credit by Rs 40.68 billion in October 2082. Although credit extension has reached Rs 59 billion till October 23 of the current year, the difference in the period has to be taken into account when comparing the figures for this period with the full month of September of the previous year. <\/p>\n
Generally, during Dashain and Tihar, the sale of vehicles, foodstuffs, clothes, mobiles, and other consumer goods increases. Since businessmen increase the stock, import and distribute goods in the market targeting the festivals, more capital is required. In such a situation, the demand for loans from banks and financial institutions is expected to increase. However, this year, the business activity in the market has not expanded as expected, which has also affected the loan demand of banks. <\/p>\n
Low morale of the private sector, uncertainty about the investment environment, and disruptions in the supply system are seen as the main reasons behind the demand not increasing as expected. The Rasuwagadhi border point has been affected due to the flood in Bhotekoshi of Rasuwa, while the Korala border point has been damaged by landslides. The obstruction at the Tatopani border point and the damage caused to the roads and infrastructure due to incessant rains in September have also created difficulties in the transportation of goods. <\/p>\n
Although the demand for goods is expected to increase in the market during the festive season, the business has not been able to gain the expected pace due to problems in the import and supply system. Since the businessmen take additional loans only after assessing the market demand, sales potential, and return from investment, the uncertainty about the expansion of the business can affect the credit demand of the banks. The disruption in the supply chain affects the availability and sale of goods, which has also affected the banking sector. <\/p>\n
After the formation of the new government this year, the morale of the private sector was expected to improve and investment and business expansion activities would increase in the market. After the booking of vehicles at the Naima and NADA Auto Shows was encouraging, it was expected that the business of the auto market would increase and it would also expand the vehicle loans of the banks. However, the enthusiasm in the exhibition did not translate as expected in the overall market turnover and demand for loans. <\/p>\n
Banks are coming up with various schemes to reduce the interest rate of loans and attract customers. The latest data shows that although the availability of investment money in the banking system and low interest rates are favorable conditions for credit expansion, it has not only increased the demand for loans.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. Credit flow of commercial banks has increased by Rs 59 billion as of October 7. The total credit of commercial banks has increased from Rs 53.51 trillion till the end of September 2020 to Rs 54.10 trillion. According to the latest data, although banks continued to extend credit in the first 23 days of […]<\/p>\n","protected":false},"author":16,"featured_media":296962,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45117,45031,45159],"tags":[],"class_list":["post-319726","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-finance-en","category-banner-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/319726","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=319726"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/319726\/revisions"}],"predecessor-version":[{"id":319727,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/319726\/revisions\/319727"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/296962"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=319726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=319726"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=319726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}