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25 districts fail to meet borrowing needs
At least 25 districts in the country do not collect adequate deposits to meet their borrowing needs, according to the latest report of the Nepal Rastra Bank (NRB). Parsa, Morang, Kailali, Sunsari and Jhapa lead the pack of districts with high rate of mismatch in deposit collection and credit disbursement.bookmark
Published at : December 24, 2017
Updated at : December 24, 2017 10:24
Kathmandu
At least 25 districts in the country do not collect adequate deposits to meet their borrowing needs, according to the latest report of the Nepal Rastra Bank (NRB). Parsa, Morang, Kailali, Sunsari and Jhapa lead the pack of districts with high rate of mismatch in deposit collection and credit disbursement.
Parsa, the gateway for over 60 percent of country’s imports, for example, had a deposit stock of Rs28.7 billion as of last fiscal year, but disbursed Rs75.3 billion in loans in the same period, shows the latest Economic Activities Study Report of the central bank. Morang, on the other hand, collected Rs49.6 billion in deposit and extended Rs102 billion in loans as of 2016-17.
Deposit collection of Kailali, Sunsari and Jhapa also trailed behind credit disbursement by a wide margin with credit-deposit ratio in these districts hovering between 166 percent and 192 percent, according to the report, which was prepared based on studies carried out in 57 districts that are economically vibrant.
The situation in other major districts, such as Kaski, which is home to tourist hub of Pokhara, and Chitwan, a major food basket of the country, is also same.
These districts have not been able to collect adequate deposit to meet their own borrowing needs, despite vibrancy in their economies.
The major reason for this is the mix of individual and institutional depositors. Around 53 percent of the deposits of banks and financial institutions in the country come from
individuals and the rest from institutions.
This shows huge contribution of institutions, especially contractual savings
institutions, corporate houses and telecom companies, among others, in total
deposit collection of banking institutions.
“Since most of these institutions are based in Kathmandu, it is natural for most of the deposits to be collected in the district,” said Nara Bahadur Thapa, executive director of the Research Department of the NRB.
Kathmandu alone collected Rs1.3 trillion in deposit as of last fiscal year, making it the largest district to collect deposits. Of this, Rs879.7 billion was extended as loans. Banks and financial institutions collected Rs2.3 trillion in deposit as of last fiscal year and extended Rs2 trillion in loan till the same period. This indicates Kathmandu makes 56-percent contribution in total deposit collection of the country and generates 44 percent of the country’s credit demand.
“These contributions are unlikely to change any time soon because Kathmandu is financial and administrative capital of the country,” said Thapa. “However, there may be some shift in the trend if economic activities grow substantially in other parts of the country and money is transferred to build major infrastructure projects.”
As of now the top 5 districts in terms of deposit collection are Kathmandu, Lalitpur (Rs163.9 billion), Kaski (Rs99.2 billion), Rupandehi (Rs89.4 billion) and Chitwan (Rs55.4 billion). These 5 districts make about three-fourth contribution to the country’s total deposit collection.
Top 5 districts in terms of credit disbursement are Kathmandu, Rupandehi (Rs112.7 billion), Morang (Rs102 billion), Kaski (Rs101.3 billion) and Lalitpur (Rs76.5 billion). These five districts consume 65 percent of the total credit disbursed in the country.
Districts that failed to collect adequate deposits
- Dhanusha
- Bardiya
- Kaski
- Kanchanpur
- Tanahu
- Nawalparasi
- Bara
- Surkhet
- Baglung
- Makwanpur
- Siraha
- Rupandehi
- Myagdi
- Sarlahi
- Lamjung
- Chitwan
- Mahottari
- Dang
- Sankhuwasabha
- Banke
- Jhapa
- Sunsari
- Kailali
- Morang
- Parsa
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