Liquidity Crisis in Nepal and Why You Should Be Concerned About It

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The liquidity problem that has been seen in banks for a long time has not been resolved yet. Banks are still facing liquidity problems.

Nepal Rastra Bank

Although the government’s expenditure has been increasing recently, the lack of liquidity has not diminished. Bank liquidity problems were seen in December last year but have gradually eased since April. But there has been no improvement in the liquidity of banks this year.

If we look at the past statistics, the money was added to the system as the government’s expenditure would gradually increase after Chaitra. Due to this, there is no shortage of liquidity in the banking system in the fourth quarter. This year’s liquidity gap seems to be a bit deeper than the previous trend.

According to the central bank, the liquidity of the bank is 15 Billion as of Sunday. According to Narayan Pokhrel, a co-spokesman for the central bank said” As of Sunday, the liquidity of the banking system was Rs 15.74 billion”. He said,” the liquidity situation is now gradually improving by the end of April, we’ll see a lot of improvement as government spending rises and election spending rises.”

money drop due to liquidity

According to the central bank, banks are still managing liquidity with a daily liquidity facility of over Rs 40 billion. Commercial banks also pulled out a permanent liquidity facility of Rs 40.75 on Sunday.

In the current fiscal year alone, banks have raised 129 billion rupees in deposits and invested 449 billion rupees in loans. Despite the widening gap between deposits and loans, banks lack the funds to invest. In addition to the loans already approved, no more loans have been paid to date.

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