Kathmandu: Due to the prolonged recession in the economy, the ability of the general public to borrow is declining. Even though interest rates have come to a very low point, even residential home loans have not been able to increase. According to the data of the central bank, commercial banks have disbursed housing loans of up to Rs 20 million worth Rs 324.56 billion by mid-Chait 2081. By mid-Chait 2080, banks had disbursed loans worth Rs 310.33 billion. If we look at the data, housing loans of up to Rs 20 million have increased by only 4.59 percent in 1 year.

In Nepal, banks offer various types of credit, including loans for individuals and businesses, as well as credit cards. Domestic credit to the private sector by banks, measured as a percentage of GDP, was at 91.69% in 2023, according to the World Bank. 

Types of Credit Offered by Banks:

Loans: Banks provide various types of loans, including personal loans, housing loans, vehicle loans, and business loans. 

Credit Cards: Banks also issue credit cards, which allow cardholders to borrow money for purchases up to a certain limit and repay it later, often with interest. 

Overdrafts: Banks may offer overdraft facilities, allowing customers to withdraw more money than is available in their account, up to a certain limit. 

Trade Credit: Banks can also extend trade credit to businesses, facilitating transactions and payments for goods and services. 

Due to the recession in the economy, there has been a slowdown in the flow of loans by banks and financial institutions. Meanwhile, bankers say that even though real estate loans are the priority of banks and financial institutions, loans in that sector have not been able to flow as expected.

Commercial banks have been offering real estate loans at a premium rate of less than 1 percent over the base rate. Meanwhile, the central bank has also been becoming more flexible in the real estate lending sector in recent times. The central bank had reduced the risk burden through last year’s monetary policy review and had made arrangements for real estate buyers to use up to 70 percent of their income for paying the bank’s principal and interest, i.e. installments. However, no changes were made to the policy in this sector in the third quarterly review released a week ago.

The central bank had reduced the risk burden through the monetary policy review last year, and it had made arrangements for home buyers to use up to 70 percent of their income for the bank's principal and interest, i.e. installment payments. Commercial banks invest Rs 324 billion in housing loans up to Rs 20 million, NIC Asia Bank has the highest.

As of mid-Chait of the current fiscal year, commercial banks have invested Rs 324 billion 56 billion in housing loans up to Rs 20 million. This is 4.59 percent more than last year. In the same period last year, commercial banks had invested more than Rs 310 billion.

NIC Asia Bank is the bank that has invested the most in housing loans up to Rs 20 million. The bank has invested Rs 49.66 billion in this sector. Similarly, Global IME Bank has invested Rs 39.66 billion. In one year, 14 banks have increased their investment in housing loans up to Rs 20 million, while 6 banks have decreased their investment.

Recently, the houses and properties that banks have brought to auction have not been sold. Recently, banks and financial institutions have been issuing notices of auction sales every day. However, the auction has not been sold. Banks and financial institutions have been busy accepting unsold auctions themselves.

The reason for this is that the non-banking assets (NBA) of banks and financial institutions have increased dramatically. In the last 1 year, the non-banking assets of banks and financial institutions have increased by 17.4 billion rupees.

According to the data published by the Rastra Bank recently, the total non-banking assets of banks and financial institutions have exceeded 44.8 billion rupees as of mid-Chait of the current fiscal year. It was equal to 27.4 billion rupees as of Chait of last year. The non-banking assets of banks and financial institutions have increased by 63.51 percent in the last 1 year.