Domestic credit grows by 12.6 percent

Domestic credit increased by 12.6 percent in the first seven months of the fiscal year 2007/08 in Nepal compared to a growth of 2.3 percent in the same period of the previous year, a report of Nepal Rastra Bank (NRB) said.

The report said a pick up in bank credit to the private sector contributed to this growth.  Net claims on government declined by 1.6 percent in the review period compared to a decline of 7.8 percent in the previous year.

"A lower level of the decline in net claims on government relative to that of last year was on account of a higher level of government expenditure in the review period." said the NRB report.

Similarly, private sector credit grew by 16.3 percent in this period compared to a growth of 9.4 percent last year. According to the report, private sector credit grew by 16.3 percent in this period based on the expansion of Rs. 6.27 billion to wholesale and retail business, Rs 6.71 billion to construction and Rs 4 billion to the real estate.

A significant expansion in light vehicle loans and margin lending for share purchase also contributed to the acceleration in bank credit to the private sector, said the report.