KATHMANDU: During the initial nine months of the ongoing fiscal year, there was a noticeable uptick in deposits mobilization at Banks and Financial Institutions (BFIs), marking a 7.2 percent increase compared to the same period in the previous fiscal year. Nepal Rastra Bank (NRB) recently released a macroeconomic and financial report indicating a rise in deposits at BFIs by Rs. 409.04 billion in the review period, compared to Rs. 355.89 billion (7 percent) during the corresponding period of the prior year.

Year-on-year statistics reveal a 12.5 percent expansion in BFI deposits by mid-April 2024. The distribution of demand, saving, and fixed deposits in total deposits demonstrated a shift, with shares standing at 5.2 percent, 29.1 percent, and 58.9 percent respectively in mid-April 2024. These figures reflect a slight decrease from the previous year, with the share of demand deposits dropping from 8 percent to 5.2 percent, while saving deposits increased marginally and fixed deposits remained relatively stable.

Moreover, private sector credit extended by BFIs experienced a Rs. 222.21 billion (4.6 percent) increase during the review period, compared to Rs. 161.98 billion (3.5 percent) in the corresponding period of the previous year. On a year-on-year basis, private sector credit from BFIs grew by 4.9 percent by mid-April 2024, with shares allocated to non-financial corporations and households at 62.7 percent and 37.3 percent respectively.

In terms of credit allocation, BFIs displayed a balanced distribution across various sectors, with notable increases observed in the production sector, construction sector, and transportation, communication, and public sector. However, there were declines in overdraft loans and certain other categories, attributed mainly to reclassification of loans from the previous year.

Overall, the trends in deposits mobilization and private sector credit extension indicate a positive trajectory in the financial sector's performance, albeit with some fluctuations in specific loan categories and sectors.