NRB Update: Total Deposits Reach Rs 7.29 Trillion by Mid-September

The Nepal Rastra Bank (NRB), in its Mid-September 2025/26 Monetary and Financial Sector Update, has reported that total deposits in the banking system reached Rs. 7.29 trillion, reflecting a healthy 12.4% year-on-year growth. This rise in deposits highlights improved liquidity conditions, growing financial confidence, and steady remittance inflows that continue to support Nepal’s banking stability.

According to NRB, deposits across banks and financial institutions (BFIs) increased from Rs. 6.49 trillion in mid-September 2024 to Rs. 7.29 trillion this year. The growth was primarily driven by strong individual and institutional savings, rising remittance inflows (up 33% to Rs. 352 billion), and low inflation, which has enhanced real deposit returns. With inflation easing to just 1.87%, depositors have experienced more stable purchasing power and confidence in the financial system.

NRB’s report shows that the broad money supply (M2) also expanded by 12.4%, supported by steady deposit mobilization and an improved balance of payments position. Reserve money increased by 10.1%, ensuring adequate liquidity for the banking sector. The base rate of commercial banks dropped to 5.72%, while the average deposit ratestood at 3.96%, signaling lower cost of funds for financial institutions. Despite these lower rates, the sustained increase in deposits suggests a strong preference for safety and liquidity among savers.

The central bank attributes the robust deposit growth to several factors — including stable foreign reserves (Rs. 2.88 trillion / USD 20.41 billion), a current account surplus of Rs. 130.7 billion, and declining interest rates that have supported a balanced flow of funds within the economy. The interbank rate averaged 2.74%, further indicating smooth liquidity circulation among commercial banks.

At the same time, credit to the private sector reached Rs. 5.54 trillion, recording a 7.3% annual growth, which remains lower than deposit expansion. This gap between deposit and credit growth has kept the banking system highly liquid, ensuring stability and credit availability for upcoming investment projects.

Economists view the surge in deposits as a positive indicator of financial system strength. It reflects not only strong remittance-backed savings but also greater public trust in the formal banking system. However, they emphasize that for long-term growth, these deposits must be effectively channeled into productive lending, particularly in infrastructure, manufacturing, and agriculture sectors, rather than short-term consumption or speculative markets.