Loan demand sluggish, commercial banks focus on home and auto loans

With loan demand sluggish, commercial banks have begun channeling accumulated liquidity into home and auto loans.

The 20 commercial banks had disbursed about 519 billion rupees under these two headings by the end of Saun of the current fiscal year, which is about 9.8 percent of total lending. According to Nepal Rastra Bank data, this includes about 373 billion rupees in home loans and about 129 billion rupees in auto loans.

Over the past three years, loan growth has been limited to around 6 percent while deposits have grown 13 to 14 percent. Nearly 1,600 billion rupees in investable funds have piled up in the banking system.

To attract customers, banks are introducing lower-interest schemes for home and auto loans. Global IME Bank leads among those investing in these two sectors.