Banks are safe:Governor Khatiwada

KATHMANDU, MAY 18 -
Governor Yubraj Khatiwada on Wednesday said main indicators of banks and financial institutions (BFIs) are in a satisfactory state. According to Khatiwada, capital adequacy ratio, non-performing loan, liquidity and credit to deposit ratio are sound.

The governor’s statement has come at a time when bad corporate governance has hit the country’s financial sector.

According to the central bank, commercial banks’ capital adequacy ratio and non-performing loan (NPL) level are at 13 percent and 2 percent, respectively, and the credit-to-deposit ratio (CD Ratio) stands at 81 percent. “All these indicators show that banks are in a sound health. Therefore, banks are safe,” said Khatiwada at a press meet here.

Khatiwada admitted that the banking system is still going through liquidity crunch. He expressed concern over declining deposits in banks. “The provision of income source disclosure might have hit deposit collection,” said Khatiwada.

Although Khatiwada said that major economic indicators were sound, the country’s economic growth is behind the target and balance of payment (BoP) is still huge. Despite initial target of 5.5 percent, economic growth is expected to shrink at 3.47 percent this year. “One can term this year as less effective in terms of economic growth,” said Khatiwada.