Bank lending surges by Rs40b as embargo ends

- Post Report, Kathmandu

Feb 25, 2016-

Lending by commercial banks has surged after the trade embargo by India was lifted, swelling by Rs40 billion in the last one and a half months. India withdrew the embargo in the first week of February. 

According to the Nepal Bankers’ Association, total loans extended by commercial banks amounted to Rs50 billion during the period from the beginning until January 1. Lending by commercial banks reached Rs1.19 trillion. 

Himalayan Bank’s Chief Executive Officer Ashoke Rana said that lending had risen surprisingly this year despite the unfavourable business environment in the country. 

Bankers said that demand for loans from borrowers had soared after the embargo started to ease. 

“We sanctioned double the amount of loans during the period mid-December to mid-January compared to the previous month,” said Bhuvan Dahal, CEO of Sanima Bank. “Lending is growing as a whole in the industry.”

According to him, demand for loans has been increasing from most industrial sectors, ranging from small industries to big corporate sectors in the last two months. 

Devendra Pratap Shah, CEO of Nepal Bank, the oldest bank in the country, said that there was optimism among borrowers. “I am not sure about the exact figure, but the demand for loans is rising,” he added. 

After India lifted the embargo, trading activities have grown in market centres. As traders could sell their goods in the market and generate cash flow, they started borrowing capital to expand their business, according to bankers. 

Ratna Raj Bajracharya, CEO of Sunrise Bank, said both lending and profits of banks had risen as goods stuck at the border points during the embargo have entered the country and are being sold. During the last one and a half months, deposits rose Rs50 billion.

Weekly Figures

As of    Deposit     Lending 

01-01-2016    1,537b    1,152b

08-01-2016    1,544b    1,156b

15-01-2016    1,545b    1,175b

22-01-2016    1,558b    1,177b

29-01-2016    1,572b    1,179b

05-02-2016    1,577b    1,184b

12-02-2016    1,587b    1,192b

(Source: Nepal Bankers Association)

Published: 25-02-2016 09:31

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