State-Owned Banks in Nepal Lag in Credit Disbursement as CD Ratio Falls Below 50% at Rastriya Banijya Bank

Nepal Banking Sector News | Commercial Bank Credit Growth | CD Ratio Analysis

Nepal's state-owned commercial banks are experiencing relatively slow credit expansion, with Rastriya Banijya Bank recording a particularly low credit-to-deposit (CD) ratio of just 48.89% at the end of Ashoj 2083.

Despite collecting substantial deposits, government-owned banks have been relatively cautious in extending loans. The latest banking figures indicate that Nepal's banking sector continues to hold significant lending capacity, while credit demand and loan disbursement remain uneven across financial institutions.

The average CD ratio of Nepal's 20 commercial banks stood at 70.25% at the end of Ashoj 2083.

State-Owned Banks Record Lower CD Ratios

Among Nepal's three major government-owned commercial banks, Agricultural Development Bank, Nepal Bank Limited, and Rastriya Banijya Bank have recorded CD ratios below 70%.

Rastriya Banijya Bank has the lowest CD ratio among the three state-owned banks.

Its deposit collection reached Rs. 7,169.30 crore, while total credit disbursement stood at Rs. 3,494.40 crore.

Similarly, Agricultural Development Bank collected deposits worth Rs. 3,487.50 crore and disbursed loans worth Rs. 2,498.20 crore.

Nepal Bank Limited collected deposits worth Rs. 4,360.50 crore, while its credit disbursement reached Rs. 2,687.40 crore.

Nepal's Commercial Banks Collect Rs. 77,498.60 Crore in Deposits

The combined deposits of Nepal's 20 commercial banks reached Rs. 77,498.60 crore by the end of Ashoj 2083.

Meanwhile, total credit disbursement stood at Rs. 54,354.00 crore.

The average CD ratio declined to 70.25%, indicating that a relatively smaller proportion of collected deposits has been converted into loans.

A lower CD ratio may reflect cautious lending practices, insufficient credit demand, or a combination of both.

Former banker Parashuram Kunwar Chhetri has highlighted that banks may be reluctant to expand lending because of credit risks. Alternatively, businesses and individuals may not be seeking sufficient loans to support stronger credit growth.

He also noted that the composition of deposits matters. Banks holding a larger proportion of current-account deposits may face less funding-cost pressure even when their CD ratios remain low.

Prime Commercial Bank Leads in CD Ratio

Among Nepal's 20 commercial banks, Prime Commercial Bank recorded the highest CD ratio at 86.41%.

Other banks with relatively high CD ratios include:

These differences highlight the varying lending strategies and credit expansion patterns among Nepalese commercial banks.

What Does a Low CD Ratio Mean for Nepal's Banking Sector?

The credit-to-deposit ratio is an important indicator of how efficiently banks utilize their deposit base to generate loans.

A lower CD ratio can indicate that banks have sufficient deposits but are not expanding lending proportionately.

For Nepal's banking sector, slower credit growth can have several implications:

• Lower business investment: Businesses may delay expansion if credit demand and lending activity remain weak.
• Pressure on bank profitability: Slower loan growth can limit interest income generation.
• Increased competition: Banks may compete more aggressively to attract quality borrowers.
• Potential lending opportunities: Businesses with strong financial fundamentals may find better borrowing opportunities.
• Economic growth concerns: Weak credit expansion can affect investment, consumption and overall economic activity.

Impact on Nepal Stock Market and Banking Shares

Slower credit disbursement can also influence investor sentiment toward Nepalese commercial banks listed on NEPSE.

Investors should monitor several financial indicators before making investment decisions:

1. Loan and advances growth.
2. Deposit growth and cost of funds.
3. Net interest margin (NIM).
4. Non-performing loan (NPL) ratio.
5. Earnings per share (EPS).
6. Distributable profit and dividend capacity.
7. Capital adequacy and regulatory requirements.

A low CD ratio does not automatically mean that a bank is financially weak. Investors should evaluate asset quality, profitability, management efficiency and future lending opportunities together.

For more insights, explore NEPSE analysis, banking-sector updates and share market training in Nepal.

Conclusion

Nepal's state-owned commercial banks continue to show relatively conservative lending patterns compared with several private-sector institutions.

Rastriya Banijya Bank's CD ratio of 48.89% stands out as particularly low, despite its substantial deposit base.

The key question for Nepal's banking sector is whether credit demand will recover and encourage banks to increase lending in the coming months.

For investors, monitoring credit growth, CD ratios, NPL levels and profitability will remain important when evaluating commercial bank shares listed on NEPSE.

Frequently Asked Questions (FAQ)

1. What is the CD ratio of Rastriya Banijya Bank?

Rastriya Banijya Bank recorded a CD ratio of 48.89% at the end of Ashoj 2083.

2. What is the average CD ratio of commercial banks in Nepal?

The average CD ratio of Nepal's 20 commercial banks stood at 70.25% at the end of Ashoj 2083.

3. Which commercial bank has the highest CD ratio in Nepal?

Prime Commercial Bank recorded the highest CD ratio at 86.41%.

4. How much total deposit has been collected by commercial banks in Nepal?

The combined deposits of Nepal's 20 commercial banks reached Rs. 77,498.60 crore.

5. Why is credit disbursement important for commercial banks?

Credit disbursement generates interest income and supports business investment, consumption and economic growth.

6. Does a low CD ratio indicate a weak bank?

Not necessarily. A low CD ratio may reflect cautious lending, weak loan demand or a conservative lending strategy. Investors should also examine profitability, asset quality and capital strength.

7. How does credit growth affect NEPSE banking stocks?

Credit growth can influence interest income, profitability and investor expectations. However, loan quality, funding costs and operating efficiency are also important.

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Disclaimer: This article is for informational and educational purposes only and should not be considered investment advice.