Liquidity Surplus in Banks: Nepal’s CD Ratio Drops to 62.5% in FY2081/82

At the end of FY2081/82, Nepal's commercial banks are holding excessive liquidity, as the Credit-to-Deposit (CD) ratio dropped to an average of 76.18%, with some banks operating well below this figure. The lowest CD ratio was recorded by Rastriya Banijya Bank at just 62.59%, reflecting vast availability of lendable funds.

As per NRB data, commercial banks collected deposits worth NPR 5.755 trillion and disbursed loans totaling NPR 4.571 trillion by the end of Ashadh 2082. Throughout the fiscal year, deposits grew by NPR 776 billion, while loans increased by only NPR 403 billion.

🔍 Key Observations:

• Global IME Bank saw the highest deposit growth of 70.16%, while NIC Asia Bank experienced a decline of 36.05%.

• Global IME also led in credit growth at 49.86%, whereas Kumari Bank, Standard Chartered, and NIC Asia reported a decrease in their credit books.

• Prime Commercial Bank recorded the highest CD ratio at 83.39%.

• Rastriya Banijya Bank (62.59%), Prabhu Bank, and Standard Chartered Bank have CD ratios below 70%, indicating conservative lending positions.

Under the current monetary policy, banks are allowed to lend up to 90% of their total deposits (as per CD ratio norms). This replaced the older CCD ratio framework from FY2078/79.

Although banks have ample liquidity, their lending capability is constrained by capital adequacy limits. Governor Maha Prasad Paudel, in the FY2082/83 monetary policy, indicated regulatory easing for banks looking to raise capital—interpreted by analysts as a green light for issuing rights shares.

🧮 What is CD Ratio?

The CD ratio includes not just customer deposits but also:

• Core capital

• Long-term foreign currency borrowings

• Refinancing funds from NRB

• Excludes interbank deposits and bond liabilities

Despite sufficient CD and LD ratios, capital adequacy pressure is keeping credit growth subdued, even when market liquidity is abundant.