Interest rates decline but credit growth remains weak

Recent data from Nepal Rastra Bank shows that while interest rates have fallen, lending to the private sector has grown modestly by just 4.4%. Total credit reached Rs 5.74 trillion, while deposits increased by 6.6% to Rs 7.74 trillion. The average lending rate for commercial banks dropped to 6.90% from 8.40% a year ago. Despite ample liquidity, private sector confidence remains subdued due to global price pressures and past economic instability. While consumption and construction sectors saw growth, agricultural lending declined.