By Our Reporter The deposit collection at Banks and Financial Institutions (BFIs) increased by 13 per cent during the last fiscal year 2023/24. According to an annual current macroeconomic and financial situation report for the fiscal year 2023/24 made public by the Nepal Rastra Bank (NRB) this week, deposit collection of banks and BFIs increased to Rs. 742.37 billion during the last fiscal year as compared to an increase of Rs. 627.25 billion in the previous year. Of that, commoners have deposited over Rs. 400 billion. The share of demand, savings, and fixed deposits in total deposits stood at 5.8 per cent, 30.3 per cent and 56.4 per cent respectively in mid-July 2024. Such shares were 7.7 per cent, 26.6 per cent and 58.9 per cent respectively a year ago. However, the banks and BFIs were unable to invest the collected deposits, resulting only the accumulation of deposits. The share of institutional deposits in the total deposit of BFIs stands at 36.2 percent in mid-July 2024. Such a share was 36.6 per cent in mid-July 2023. Similarly, private sector credit from BFIs increased to Rs. 276.94 billion (5.8 per cent) in the review year compared to an increase of Rs. 175.94 billion (3.8 per cent) in the previous year. The shares of private sector credit from BFIs to non-financial corporations and households stood at 63.3 per cent and 36.7 per cent respectively in mid-July 2024, according to the NRB. Such shares were 62.7 per cent and 37.3 per cent a year ago. In the review year, private sector credit from commercial banks, development banks and finance companies increased by 5.8 per cent, 5 per cent and 7.7 per cent respectively. Out of the total outstanding credit of the BFIs, 66.5 per cent is against the collateral of land and buildings and 13.2 per cent against the collateral of current assets (such as agricultural and non-agricultural products). The term loan extended by BFIs increased by 22.2 per cent, real estate loan (including residential personal home loan) by 9.6 per cent, and margin nature loan by 18.1 per cent. Similarly, the trust receipt (import) loan extending by BFIs increased by 12.6 per cent while that of hire purchase loan decreased by 22 per cent, overdraft by 46.3 per cent, and demand and working capital loan by 17.6 per cent. In sum, the increase in deposits and poor mobilisation of credit showed that the national economy has not been healthy. Economy: External indicators positive, domestic indicators negative The economy has come out of the prolonged recession that plagued the business and financial sectors in the aftermath of the COVID-19 pandemic. According to the annual statistics of the Fiscal Year 2023/24 published by the Nepal Rastra Bank (NRB) this week, foreign exchange reserves, current account, remittance and private sector lending witnessed impressive growth. Gross foreign exchange reserves increased by 32.6 per cent to Rs. 2041.10 billion by the end of the last fiscal, in mid-July 2024 from Rs. 1539.36 billion in mid-July 2023. Of the total foreign exchange reserves, reserves held by the NRB increased 37.4 per cent to Rs. 1848.55 billion in mid-July 2024 from Rs. 1345.78 billion in mid-July 2023. Reserves held by the Banks and Financial Institutions (BFIs) decreased by 0.5 per cent to Rs. 192.55 billion in mid-July 2024 from Rs. 193.59 billion in mid-July 2023. Based on the imports of 2023/24, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 15.6 months, and merchandise and services imports of 13 months, the NRB said in its annual report on macroeconomic and financial situation of the country. The ratio of reserves-to-GDP and reserves-to-imports stood at 35.8 per cent and 108.6 per cent respectively at the end of 2023/24. A year before, such ratios were 28.8 per cent and 83 per cent. While the export trade of the country remained negligible, remittance backed the foreign exchange reserves. Remittance inflows increased by 16.5 per cent to Rs. 1445.32 billion during 2023/24 compared to an increase of 23.2 per cent in the previous year. The current account remained at a surplus of Rs. 221.34 billion. It faced a deficit of Rs. 46.57 billion in FY 2022/23. Last year, capital transfer decreased by 22.9 per cent to Rs.5.81 billion and net Foreign Direct Investment (FDI) remained Rs. 8.40 billion. A year earlier, capital transfer and net FDI amounted Rs. 7.54 billion and Rs. 6.17 billion respectively. Likewise, Balance of Payments (BOP) remained at a surplus of Rs. 502.49 billion in 203/24 compared to a surplus of Rs. 285.82 billion in 2022/23. The government of Nepal mobilised domestic debt of Rs. 234.42 billion and made principal repayment of Rs. 182.62 billion thereby mobilising net domestic debt of Rs. 51.80 billion in 2023/24. Net domestic debt mobilization stood at 0.9 per cent of GDP. The GoN mobilised external loan of Rs. 123.61 billion in the review period. The outstanding public debt amounted Rs. 2433.24 billion in mid-July 2024. Out of it, Rs. 1252.34 billion was foreign and Rs. 1180.90 billion domestic loan. The ratio of total outstanding public debt to GDP came down to 42.65 per cent last year which was 42.99 per cent in 2022/23.