Money Supply (M1+) Jumps 32.8% as Savings & Call Deposits Soar

Nepal’s latest monetary survey paints a strong picture of rising liquidity in the financial system. Money Supply (M1+) rose by 32.8% year-on-year in August 2025, climbing to over Rs. 4.27 trillion. This increase was primarily driven by a surge in savings and call deposits, which grew by 38.7% (Rs. 901.7 billion), reflecting a behavioral shift among households and businesses toward more liquid and flexible deposit accounts.

Currency in circulation also increased by 13.4% (Rs. 77.7 billion), indicating continued reliance on cash for daily transactions, while demand deposits expanded by 24.5% (Rs. 76.3 billion), showing stronger short-term liquidity in banks. The preference for savings and call deposits suggests that depositors are prioritizing accessibility of funds amid political and economic uncertainties, avoiding long-term commitments like fixed deposits which actually fell by 5.2%during the same period.

Economists highlight that this expansion of M1+ improves financial participation and strengthens banking liquidity, but it comes with risks. If this surge in deposits is not effectively channeled into productive investment sectors like infrastructure, industry, and job creation, it could fuel inflationary pressures and widen the import gap. For the central bank, the challenge is balancing liquidity management while ensuring that credit flows toward growth-supporting activities rather than just consumption or speculative sectors.