While financial institutions are dependent on the capital for deposits, other areas have started to challenge the Valley’s dominance over loan disbursement.
Kathmandu area has been contributing more than 68 per cent of total deposits at financial institutions for the past three fiscal years. However, the capital’s share in total lending has slid in the review period from 63.7 per cent in fiscal 2010-11 to 58 per cent in 2012-13, according to the Economic Activities Study Report 2012-13 published by Nepal Rastra Bank (NRB).
The study report has classified Nepal into eight regions — Kathmandu, Biratnagar, Janakpur, Birgunj, Pokhara, Siddharthanagar, Nepalgunj and Dhangadi. Among the regions, Kathmandu accounted for 69 per cent of total deposits while it was responsible for 58 per cent of total borrowing till mid-July 2013. However, the area houses only 9.4 per cent of the total population.
In the last fiscal year, financial institutions — commercial banks, development banks and finance companies — had collected deposits worth Rs 1.223 trillion, of which financial institutions located in the Valley accounted for Rs 843.3 billion. Likewise, of the total lending worth Rs 901.3 billion made by financial institutions, Kathmandu disbursed loans worth Rs 521.9 billion.
“A majority of banking transactions are undertaken in the capital as most economic activities are concentrated in the Valley,” pointed out spokesperson for NRB Bhaskar Mani Gyawali.
Although deposit collection in Kathmandu grew by the highest rate at 21.3 per cent last year, the capital region recorded lowest growth rate in terms of lending. As compared to the previous fiscal, borrowing in Kathmandu area increased by 16 per cent last year. In the rapidly industrialising areas such as Biratnagar, Janakpur, Dhangadi and Nepalgunj, loan growth registered at higher than 40 per cent during review period.
“Loan disbursement has increased in areas where economic activities are growing and there is need of financing,” added Gyawali.
The heavy presence of financial institutions can also be attributed to increased banking transactions in the area. According to the report, more than one-third of the branches of financial institutions are serving the Kathmandu area.
There were 883 branches of the total 2,909 branches of class ‘A’, ‘B’, ‘C’ and ‘D’ financial institutions located in the region, till the end of last fiscal year. Commercial banks have the highest number of branches located in the Kathmandu region.
Since most of the business in banks come from urban areas, they are not eager to venture into high-cost yet low-profit generating remote areas.
To promote financial inclusion even in remote areas, the central bank has introduced a policy that allows financial institutions to open a branch in the Valley only after a branch is opened in one of the ‘remote’ districts recognised by NRB.
source: the himalayan times,16 jan 2014
LINK
Kathmandu area has been contributing more than 68 per cent of total deposits at financial institutions for the past three fiscal years. However, the capital’s share in total lending has slid in the review period from 63.7 per cent in fiscal 2010-11 to 58 per cent in 2012-13, according to the Economic Activities Study Report 2012-13 published by Nepal Rastra Bank (NRB).
The study report has classified Nepal into eight regions — Kathmandu, Biratnagar, Janakpur, Birgunj, Pokhara, Siddharthanagar, Nepalgunj and Dhangadi. Among the regions, Kathmandu accounted for 69 per cent of total deposits while it was responsible for 58 per cent of total borrowing till mid-July 2013. However, the area houses only 9.4 per cent of the total population.
In the last fiscal year, financial institutions — commercial banks, development banks and finance companies — had collected deposits worth Rs 1.223 trillion, of which financial institutions located in the Valley accounted for Rs 843.3 billion. Likewise, of the total lending worth Rs 901.3 billion made by financial institutions, Kathmandu disbursed loans worth Rs 521.9 billion.
“A majority of banking transactions are undertaken in the capital as most economic activities are concentrated in the Valley,” pointed out spokesperson for NRB Bhaskar Mani Gyawali.
Although deposit collection in Kathmandu grew by the highest rate at 21.3 per cent last year, the capital region recorded lowest growth rate in terms of lending. As compared to the previous fiscal, borrowing in Kathmandu area increased by 16 per cent last year. In the rapidly industrialising areas such as Biratnagar, Janakpur, Dhangadi and Nepalgunj, loan growth registered at higher than 40 per cent during review period.
“Loan disbursement has increased in areas where economic activities are growing and there is need of financing,” added Gyawali.
The heavy presence of financial institutions can also be attributed to increased banking transactions in the area. According to the report, more than one-third of the branches of financial institutions are serving the Kathmandu area.
There were 883 branches of the total 2,909 branches of class ‘A’, ‘B’, ‘C’ and ‘D’ financial institutions located in the region, till the end of last fiscal year. Commercial banks have the highest number of branches located in the Kathmandu region.
Since most of the business in banks come from urban areas, they are not eager to venture into high-cost yet low-profit generating remote areas.
To promote financial inclusion even in remote areas, the central bank has introduced a policy that allows financial institutions to open a branch in the Valley only after a branch is opened in one of the ‘remote’ districts recognised by NRB.
source: the himalayan times,16 jan 2014
LINK
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