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Bank Slash

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Commercial banks have announced a cut in the short term lending rates by half to 2 percentage points in a bid to stimulate borrowing, which has slumped over the last three months due to slowdown seen in manufacturing and real estate sector.
Citizens bank International, for instance, said it is now offering its short term lending rates at 12 percent down from 14 percent.
Laxmi Bank has also done the same. it recently extended loans to Nepal Electricity Authority for 6 months at 10 percentage interest, which is far too low than prevailing rates. Commerz and Trust Bank too provided loans to the state owned utility company at 11 percent.
Overall, interest rates on short-term, which include demand loans, over-drafts and export bills, among others have now come down to an average of 12 percent from around 14 percent earlier.
"We had to cut the rates due to the suppression of credit demand whereas liquidity surplus continued to soar", Rajan Singh Bhandari, CEO of Citizens Bank International told Republica.
Nepal Rastra Bank told deposit collections of 31 commercial banks in the first two months of the current fiscal year had jumped by Rs. 14 billion to Rs. 701.85 billions whereas their credit flows dropped to Rs. 522.25 billion in mid-September from Rs. 522.85 billion in mid-July. Bankers said this trend continue in the third month (mid-October) as well.
Commercial banks, which suffered from liquidity crunch for almost 2 years, witnessed a sudden rise in deposits over the last three months after depositors started shifting money from development banks and financial companies due to erosion in trustworthiness of development banks and finance companies. But these commercial banks - currently flush with excess liquidity of around 27 billion - have not been able to find substantial borrowers.
Bankers attributed sudden drop in credit demand due to slump in real

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