Banks not able to mobilize higher loans even after election

Kathmandu, January 3:

Bank and financial institutions, especially the commercial banks, have not been able to mobilize loans significantly even after the November 19 Constituent Assembly election, which has made investors upbeat about political and economic climate of the country.

Though the bankers claim that they have been mobilizing more loan after the election, hard facts does not corroborate this: Post-election, all the 31 commercial banks
have mobilized Rs 18 arba in deposit while they have been able to invest only Rs 8 arba in loan.



As of now, the total deposit in the commercial banks stands at 10.93 kharba while they have issued only Rs 7 kharba in loan. Their average loan-deposit ratio stands at 70 percent.

They have not been able to mobilize enough loan as per the fiscal policy that ask them to invest more on the sector that create employment and boosts economic growth.
However, the BFIs are increasing investing on more lucrative sector such as share and retail loan.

“The liquidity in the banking system got transferred to the share market after the election,” says banking expert Parshuram Kunwar Chhetri. “The loan investment remains restricted also due to bankers mindset of seeking only quick high returns.”