Nepal is facing an extreme liquidity crunch at the moment. Experts claim that fall in remittance, low capital expenditure, import-export imbalance, and rumored channeling of funds to non-banking systems like cryptocurrencies, Hundi, etc. are the major causes.

Furthermore, as the economy gained pace after the lockdown, the demand for capital has skyrocketed. Thus, banks have been involved in aggressive credit expansion at a time when the deposit is declining. In retaliation, depository financial institutions like commercial banks, development banks, finance, and microfinance companies are voraciously mobilizing their marketing team to sell various deposit products at attractively high-interest rates.

The prime…


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