Fewer depositors are parking funds in fixed deposit accounts these days as return on these products has been falling due to excess liquidity in the banking sector.
Money parked in fixed deposit accounts of banks and financial institutions (BFIs) increased by 7.6 per cent to Rs 452.94 billion in the one-year period to mid-July, compared with the growth of 14.3 per cent recorded in the same period a year ago, shows the latest macroeconomic report of Nepal Rastra Bank (NRB).
The growth rate of fixed deposits tapered last fiscal as return on these products fell. Average deposit rate stood at 4.09 per cent in mid-July as against 5.25 per cent a year ago.
Deposit rates have been falling lately due to excess liquidity to the tune of around Rs 100 billion in the banking sector. Excess liquidity denotes that BFIs are not finding enough avenues to channel the money obtained in form of deposits. As a result, many are expressing reluctance to accept deposits to avoid incurring additional costs on money which they cannot sell in the form of loans.
NRB data show that fixed deposits at commercial banks grew by 5.8 per cent to Rs 365.55 billion in the last fiscal. A year ago, fixed deposits at class ‘A’ financial institutions had gone up by 16.1 per cent.
However, situation at development banks was a bit different. Fixed deposits at class ‘B’ development banks jumped by 23 per cent to Rs 55.39 billion in the last fiscal. A year ago, fixed deposit at these institutions had increased by 21.1 per cent to Rs 45.03 billion.
The amount of fixed deposits at development banks increased by an impressive manner as rates offered by these institutions were relatively better than those of commercial banks and reputation of these banks are relatively better than those of finance companies.
Finance companies, on the other hand, recorded 3.2 per cent growth in fixed deposits to Rs 33.95 billion. Fixed deposits at these class ‘C’ financial institutions had dropped by 8.8 per cent in the same period a year ago.
Fixed deposits currently make up 32 per cent of the total deposits of BFIs. A year ago, the share of fixed deposits of BFIs made up 35.4 per cent of the total deposits of BFIs.
Of the total fixed deposits held by BFIs as of mid-July, around 94
per cent comprised deposits in local currency and the rest in convertible currency.
Types of deposits held by BFIs
Demand Deposits Rs 129.7 billion
Saving Deposits Rs 589.7 billion
Fixed Deposits Rs 452.9 billion
Call Deposits Rs 223.4 billion
Margin Deposits Rs 11.1 billion
Total Deposits Rs 1406.8 billion
source: the himalayan times,25 august 2014
LINK
Money parked in fixed deposit accounts of banks and financial institutions (BFIs) increased by 7.6 per cent to Rs 452.94 billion in the one-year period to mid-July, compared with the growth of 14.3 per cent recorded in the same period a year ago, shows the latest macroeconomic report of Nepal Rastra Bank (NRB).
The growth rate of fixed deposits tapered last fiscal as return on these products fell. Average deposit rate stood at 4.09 per cent in mid-July as against 5.25 per cent a year ago.
Deposit rates have been falling lately due to excess liquidity to the tune of around Rs 100 billion in the banking sector. Excess liquidity denotes that BFIs are not finding enough avenues to channel the money obtained in form of deposits. As a result, many are expressing reluctance to accept deposits to avoid incurring additional costs on money which they cannot sell in the form of loans.
NRB data show that fixed deposits at commercial banks grew by 5.8 per cent to Rs 365.55 billion in the last fiscal. A year ago, fixed deposits at class ‘A’ financial institutions had gone up by 16.1 per cent.
However, situation at development banks was a bit different. Fixed deposits at class ‘B’ development banks jumped by 23 per cent to Rs 55.39 billion in the last fiscal. A year ago, fixed deposit at these institutions had increased by 21.1 per cent to Rs 45.03 billion.
The amount of fixed deposits at development banks increased by an impressive manner as rates offered by these institutions were relatively better than those of commercial banks and reputation of these banks are relatively better than those of finance companies.
Finance companies, on the other hand, recorded 3.2 per cent growth in fixed deposits to Rs 33.95 billion. Fixed deposits at these class ‘C’ financial institutions had dropped by 8.8 per cent in the same period a year ago.
Fixed deposits currently make up 32 per cent of the total deposits of BFIs. A year ago, the share of fixed deposits of BFIs made up 35.4 per cent of the total deposits of BFIs.
Of the total fixed deposits held by BFIs as of mid-July, around 94
per cent comprised deposits in local currency and the rest in convertible currency.
Types of deposits held by BFIs
Demand Deposits Rs 129.7 billion
Saving Deposits Rs 589.7 billion
Fixed Deposits Rs 452.9 billion
Call Deposits Rs 223.4 billion
Margin Deposits Rs 11.1 billion
Total Deposits Rs 1406.8 billion
source: the himalayan times,25 august 2014
LINK
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