Net Liquidity
·

By Sandeep Chaudhary

Analysis of Nepal Banking Sector Net Liquidity Percentages As on Chait end, 2080 (Mid-April 2024)

Analysis of Nepal Banking Sector Net Liquidity Percentages As on Chait end, 2080 (Mid-April 2024)

Understanding Bank Net Liquidity

Net Liquidity Percentage, calculated as Net Liquid Assets to Total Deposits, is a critical measure of a bank's financial health and stability. This ratio indicates a bank's ability to meet its short-term obligations and is essential for maintaining depositor confidence and regulatory compliance. In Nepal, the minimum required net liquidity percentage is set at 20%.

Banks with the Highest Liquidity

The latest data reveals that several banks have significantly exceeded the minimum liquidity requirement, showcasing robust financial management and resilience. Standard Chartered Bank Nepal Ltd. leads the chart with an impressive net liquidity percentage of 42.53%, followed by Nepal SBI Bank Ltd. at 39.75%. These banks have demonstrated exceptional liquidity management, ensuring they have sufficient liquid assets to cover any immediate withdrawal demands from their depositors.

Performance of Other Banks

Other notable performers include the Agricultural Development Bank Ltd. with a net liquidity of 34.02% and Nepal Bank Ltd. at 33.83%. These figures indicate a strong liquidity position, reflecting prudent asset management and a conservative approach to risk.

Banks like Nepal Investment Mega Bank Ltd. (33.12%), Global IME Bank Ltd. (32.71%), and Himalayan Bank Ltd. (32.32%) also show commendable liquidity levels, comfortably surpassing the regulatory threshold.

Areas of Concern

However, not all banks are performing equally well. NIC ASIA Bank Ltd., with a net liquidity percentage of 20.44%, barely meets the minimum requirement. This close margin suggests potential vulnerabilities that could pose risks during financial stress. Banks like Machhapuchhre Bank Ltd. (25.18%) and Nabil Bank Ltd. (24.90%) also have lower liquidity percentages, indicating the need for improved asset management strategies.

Conclusion

Overall, while many banks in Nepal exhibit strong liquidity positions, ensuring they can meet depositor demands and regulatory requirements, some banks need to enhance their liquidity management practices. Maintaining a healthy net liquidity percentage is crucial for sustaining depositor confidence and achieving long-term financial stability.

As the banking sector continues to navigate economic challenges, maintaining and improving net liquidity ratios will remain a top priority for financial institutions to ensure resilience and trust in the system.

Related Blogs

Nepal Appoints Dr. Bishwanath Paudel as New Nepal Rastra Bank Governor Amid Crucial Economic Challenges
Top

4 min read

Nepal Appoints Dr. Bishwanath Paudel as New Nepal Rastra Bank Governor Amid Crucial Economic Challenges

r. Bishwanath Paudel Nepal Rastra Bank Governor Appointment The Government of Nepal appointed Dr. Bishwanath Paudel as the 18th Governor of Nepal Rastra Bank, filling a leadership vacancy after over one and a half months. Dr. Paudel is an experienced economist with a Ph.D. in Economics from the University of California and has served as Vice-Chairman of Nepal’s National Planning Commission. He has international exposure from roles at the World Bank and International Labour Organization. His appointment followed political controversy but was cleared by the Supreme Court. The financial markets responded positively, with the NEPSE index rising nearly 50 points. Key challenges ahead include: Managing high liquidity but low credit growth in Nepal’s banking sector Tackling rising Non-Performing Loans (NPLs) Controlling inflation and maintaining price stability Strengthening banking regulations and governance Promoting financial inclusion and consumer-friendly banking services Dr. Paudel’s leadership is expected to bring monetary policy reforms, address banking sector weaknesses, and improve financial stability to support Nepal’s economic growth. Suggested English Search Keywords: “Bishwanath Paudel Nepal Rastra Bank Governor” “Nepal central bank new governor 2025” “Nepal Rastra Bank monetary policy reforms” “Nepal banking sector liquidity issues” “Non-performing loans Nepal banking” “Nepal financial market reaction 2025” “Nepal economic stability and inflation control” “Financial inclusion in Nepal”

Dipesh Ghimire

·

20 May, 2025

The Appointment of the Central Bank Governor: Challenges and Expectations
Top

3 min read

The Appointment of the Central Bank Governor: Challenges and Expectations

The Appointment of the Central Bank Governor: Challenges and Expectations Following the expiration of Governor Maha Prasad Adhikari’s term on Chaitra 6, Nepal Rastra Bank remained without a formal Governor for an extended period—a delay that not only signaled institutional paralysis but also breached the provisions outlined in the Nepal Rastra Bank Act, 2058. During this interim period, a Deputy Governor was temporarily tasked with leading the institution. Legally, the Governor is to be appointed by the Council of Ministers for a five-year term, based on recommendations from a selection committee established under the Act. The central bank is a cornerstone of economic governance, and its leadership demands deep expertise in macroeconomics and monetary policy. It is generally expected that the Governor should be a seasoned economist, capable of crafting and steering policy to maintain price stability and manage inflation. Globally, many central banks have moved toward inflation targeting, setting clear benchmarks to maintain economic balance. Nepal too must embrace this forward-looking approach. A prominent case is India’s RBI Governor Shaktikanta Das, who was ranked among the top central bankers worldwide by Global Finance magazine. His recognition was based on his success in managing inflation, ensuring currency stability, and guiding interest rate policies—areas in which any central bank leader must excel.

Dipesh Ghimire

·

19 May, 2025