17 December, Kathmandu. The paucity of investible funds (liquidity) has affected the cooperatives. Minraj Kandel, president of the National Federation of Co-operatives, says that after banks and financial institutions, cooperatives are facing the problem of cash.
Banks have been aggressive in lending since the beginning of the current financial year. Could not deposit Recently, deposits have declined and the demand for loans is increasing.
As banks have become aggressive in lending, the demand for credit in cooperatives has also increased rapidly. “The high demand for credit has also put pressure on the liquidity of the cooperatives,” Chairman Kandel said.
Nepal Rastra Bank has directed banks to maintain the loan-deposit ratio (CD ratio) at 90 per cent. However, due to the high demand for credit, the CD ratio of 24 out of 27 commercial banks has exceeded 90 per cent. This reflects the pressure of liquidity crunch in the banks.
Anil Upadhyay, president of the Nepal Bankers Association, says that the liquidity is not going to decrease immediately. Till the end of the current financial year, the government has spent only 5.46 per cent of the capital expenditure till Wednesday.
On the other hand, remittances from abroad have been declining since the first month of the current financial year. Imports are also increasing. So it will take time for the liquidity to come down, says Chairman Upadhyay.
He said that a large number of depositors from the cooperative sector are coming to the banking sector. He said that huge amount of money has not come as cooperative societies themselves are investing huge amount of loan.
“It seems that even the general public does not know where deposits are safe,” Upadhyay says. “Again, banks have good interest rates.”
According to the Bankers’ Association, banks have invested Rs 14 billion in loans in the first week of November alone. Instead of an increase in deposits, there has been a decline of Rs 7 billion.
The total credit investment of banks is Rs. On the other hand, deposits fell from Rs 42.26 trillion to Rs 42.19 trillion.
running co-operative banks
Paritosh Paudyal, president of the Savings and Credit Central Cooperative Union (NEFSCUN), says that banks are turning to cooperatives for deposits. “But cooperatives also have liquidity problems. They cannot afford to pay,” he said.
He said that the current problem is not just of one sector but of the entire economy. He said that this will create a big challenge in the economy, also the government and stakeholders should give due attention to it.
The total deposits in cooperative societies are around Rs 5 lakh crore. Regulatory offices do not strictly monitor self-regulated cooperatives. Unlike banks, there is no mandatory system of maintaining CD ratio in co-operative societies.
Co-operative societies have been depositing additional amount in the bank by giving loans to their members. Under normal circumstances, banks, which do not care much, are now urging cooperatives to ‘deposit for some time due to lack of liquidity’.
To address the liquidity problem, NRB has been sending liquidity from time to time. NRB spokesperson Dev Kumar Dhakal says that liquidity has been sent regularly to keep the market moving.
NRB withdraws when there is excess liquidity in the market and sends when there is shortage.
As per the research department of NRB, Rs. According to NRB, during this period, Rs 822.68 billion was disbursed through the Permanent Liquidity Facility and Rs 10.08 billion was disbursed.
With the inflow of such a huge amount, NRB has drawn out liquidity of only Rs 60 billion. During this period, liquidity of Rs 60 billion has been raised through deposit collection instruments of Rs 31.65 billion and reverse repo of Rs 28.35 billion. In the first three months of last year, NRB raised Rs 60 billion through reverse repo.
Banks, on the other hand, have not stopped lending despite the decline in deposits. NRB spokesperson Dhakal says the liquidity problem has deepened as banks are dependent on short-term resources.