Article by Deepak Luitel

Over the past few months, there have been frequent write-ups related to the Nepalese banking sector and multiple discussions on whether BFIs have sufficient funds available to extend credit in the economy. The present condition of the credit crunch has hit the banking sector severely, which has forced the banks to increase the interest rate on deposit rates to attract new deposits to keep the structural balance of deposit and credit.

So, why this sudden credit crunch in the banking sector? Is it due to the decrease in the growth rate of remittance or is it due to the massive increase in the growth rate of imports, or the inability of the government to spend the budgeted amount on capital…


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