He also said the central bark would introduce new policies within February to bring the situation to normalcy. [break]
“Political instability is the main reason behind liquidity crunch in the banking system,” Rayamajhi said, after inaugurating Metro Development Bank in Pokhara on Sunday. He also said people were keeping money at home due to uncertainty and investing in gold which has led to shortage of notes in banks.
“Compared to previous years, a large quantity of gold has been imported in Nepal this year. This has also led to shortage of liquidity. Likewise, banks are making investment more than their actual deposit,” he added. He also said the increasing number of automated teller machines (ATMs) across the country is also affecting the flow of notes. “The number of ATMs across the country has increased to 820 from 350 recorded a year ago. Each ATM machine holds around Rs 2 million, which is a big figure,” he added.
Rayamajhi also informed that latest move taken by the central bank to limit loan disbursement in real estate sector is likely to bring positive results in reducing liquidity crunch.
Min Bahadur Shrestha, chief manager at Nepal Rastra Bank´s Pokhara branch, also said the disbursement of loans more than the actual deposits by banks was the major reason behind liquidity crisis. “In the last fiscal year, banks in Pokhara increased their deposits by 35 percent and loans by 41 percent. Investment in unproductive sector does not generate enough jobs and hence can invite political problems,” he added.
Metro Development Bank is the 75th development bank in the country. The bank has announced 365-day banking service and also started evening counter from the very first day of its operation. The bank is promoted by 85 business people from Pokhara, Kathmandu, Myagdi, Baglung, Lamjung and Gorkha. The bank has issued capital of Rs 100 million and paid-up capital of Rs 70 million. It offers interest in the range of 8.5 to 12.5 percent on different saving schemes like Simple Saving, Nari saving and Youth Saving among others and provides ATM, locker and money transfer facilities.
A total of 63 banks and financial institutions have opened 119 branches in the lake city.
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