Reimports and shares were the main focus of bank credit expansion.
After the Nepal Rastra Bank issued a flexible financial policy in order to make domestic profitable conditioning sustainable, the credit inflow of banks and fiscal institutions has started to increase in the import and stock request.
According to the data published by Nepal Rastra Bank in the first 2 months of the current fiscal time, loans from banks increased by 73 billion 39 crores or 1.4 percent. still, the expansion of loans to small and medium diligence, which are considered the base of the frugality, as well as to the poor, has been seen as negative.
Up to August of the current fiscal time, the loftiest credit expansion is in significances. Loans of banks that flowed for significances increased by 17 percent. In the same period of the former fiscal time, the import credit increased by 12.7 percent only.
Bank loans also increased after dealers increased the import of consumer goods targeting carnivals similar as Dashain and Tihar. Businessmen have also increased the import of buses when the interest rate of the bank is low. As a result, there has been an increase in lending by banks under the title of import.
Three times agone, after the foreign exchange reserves dropped to a low point, the National Bank made arrangements to keep a cash periphery of 50 to 100 when opening letters of credit( LC) for significances to discourage import credit. With the enhancement of foreign exchange reserves, the National Bank has removed this provision. Businessmen opposed the provision of cash periphery. The International Monetary Fund( IMF) had also suggested the Rashtra Bank to remove the cash periphery system. After the flexible policy of the National Bank, the credit expansion of the banks has also been seen in the stock request. In the two months of the current fiscal time, the share mortgage loans of banks have increased by 10.7 percent. During the same period of the last fiscal time, the loan under this title increased by only 1.8 percent.
Three years ago, the National Bank started setting limits on share mortgage loans, saying that banks' loans were invested in unproductive sectors. originally, a person or association can adopt a outside of 40 million rupees from a fiscal institution and a outside of 120 million rupees from the entire fiscal system. Last time, the National Bank increased it to 120 million rupees for individual investors and 20 million rupees for institutional investors. According to the financial policy of the current fiscal time, the limit isn't applicable for institutional investors. In the alternate week of June, with the power sharing agreement between the two major political parties, the stock request has been continuously rising. Along with this, investors are adding their investment by taking large quantum of loans from banks and fiscal institutions.
Compared to the last fiscal time, there has been an enhancement in particular home loans, vehicle loans and working capital loans of banks up to Rs 2 crore this time. With the financial policy of the fiscal time 2080/81, the National Bank increased the limit of the first domestic house loan from 15 million to 2 million rupees. The threat burden in share mortgage, real estate and hire purchase loans was reduced. also, the time to apply the current capital loan limit was extended by one time from the current time's financial policy. Former Administrative Director of Nepal Rastra Bank and Economist Nar Bahadur Thapa says that despite the expansion of banks' loans in the areas of significances, real estate, share mortgages, etc., there's no threat like in the history. still, he said that it's fussing that the credit expansion of small and medium enterprises, which is the base of the frugality, is negative.
According to the data of the National Bank, compared to last time, there has been a drop in the purchase of bills of banks and the disbursement of loans under the title of the poor. By August of the current fiscal time, the credit growth rate under both these headlines is negative.
