KATHMANDU: Nepal’s banking system is experiencing a sharp rise in deposits while credit growth remains slow, creating pressure on financial institutions.

Total deposits in the banking system have reached Rs 7.952 trillion, while total lending stands at Rs 5.874 trillion, according to the latest data from Nepal Rastra Bank.

Commercial banks hold Rs 7.172 trillion in deposits, while development banks and finance companies account for Rs 780 billion.

On the lending side, commercial banks have issued Rs 5.226 trillion in loans, and other financial institutions have extended Rs 648 billion.

Despite falling interest rates, credit demand from the private sector has not increased as expected. Businesses remain cautious, and investment activity has stayed limited, slowing loan growth.

The banking system’s credit-to-deposit ratio stands at 73.18 percent, within the regulatory limit, indicating that banks still have space to expand lending.

Interbank interest rates have dropped to 2.75 percent, reflecting excess liquidity in the system and limited demand for funds among banks.