Kathmandu. Banks are unable to make additional investments as the deposit-loan (CD) ratio set by the Nepal Rastra Bank is exceeded. Banks lack liquidity as deposits do not keep pace with credit demand. According to the Nepal Rastra Bank, the total CD ratio of banks has reached 88.92 percent.

NRB has said that the CD ratio should be kept within 90 percent by mid-July through monetary policy. However, banks have been cautious about increasing the CD ratio by 90 per cent, which would cause inconvenience to them. "Only small loans are being approved," said a bank CEO.

Chairman of the Nepal Bankers Association Bhuvan Kumar Dahal said that the bank has not stopped giving loans. In the monetary policy of the current Fiscal Year, provision has been made to maintain the loan to deposit (CD) ratio in the banks by removing the capital, loan and deposit (CCD) ratio. After this arrangement, even though banks were not allowed to lend from capital, there was competition in interest rates to increase deposits.

NRB had intervened after the interest rate of commercial banks approached 12 percent due to competition from banks. Banks have set interest rates in single digits after the directive last Tuesday barred them from changing interest rates by more than 10 percent or less.