Private sector credit from BFIs rises by 1.4 pc: NRB

KATHMANDU: Private sector credit from banks and financial institutions (BFIs) increased by Rs 73.39 billion (1.4%) in the first two months of the current fiscal year 2024/25, compared to a rise of Rs 33.60 billion (0.7%) in the same period last year. According to the macroeconomic and financial situation report released by Nepal Rastra Bank (NRB) on Tuesday, year-on-year (y-o-y) credit to the private sector from BFIs increased by 6.6% in mid-September 2024.

The shares of private sector credit from BFIs to non-financial corporations and households were 64% and 36% respectively in mid-September 2024, compared to 63% and 37% a year ago. In the first two months of the current fiscal year until mid-September, private sector credit from commercial banks, development banks, and finance companies increased by 1.5%, 1.1%, and 3.0% respectively.

As of mid-September 2024, 13.2% of the total outstanding credit of BFIs was against collateral of current assets (such as agricultural and non-agricultural products), while 66.2% was against land and buildings. These ratios were 12.1% and 67.2% respectively a year ago.

In two months, the outstanding loan of BFIs to the agriculture sector increased by 0.2%, the production sector by 0.9%, the construction sector by 1.2%, the wholesale and retail sector by 1.2%, the transportation, communication, and public sector by 2.2%, the service industry sector by 1.7%, and the consumable sector by 1.1%.

Term loans extended by BFIs increased by 1.8%, margin nature loans by 10.7%, trust receipt (import) loans by 17.0%, hire purchase loans by 0.8%, real estate loans (including residential personal home loans) by 0.2%, and cash credit loans by 1.1%, while overdraft loans decreased by 4.9%.