Deposit base of the banks touch Nu 179mn

Deposit base of the banks touch Nu 179mn

Total individual savings, as of September, stood at Nu 120mn

The total deposit base of the banking sector increased from Nu 176mn in nine months last year to Nu 179mn in September this year, up by 11.44%.

The Royal Monetary Authority’s (RMA) financial sector review report attributed the rise by Nu 20.3mn. It has increased in current and savings accounts, which constituted almost 60% of the total deposit. Fixed accounts alone constituted around Nu 90.5mn.

Individual savings constituted 60.9% of the current and saving accounts. Retail deposits increased by 9% and private companies constituted 4.5%. Compared with last year, saving accounts deposits increased by almost Nu 8.8mn. Total individual savings, as of September, stood at Nu 120mn.

Similarly, the current deposits that are mainly maintained by the banking sector also increased from Nu 32mn last year to Nu 33.5mn this year, reflecting an increase of more than Nu 1mn.

According to the report, the year-on-year growth in the overall deposit base shows that the increase in deposit base was due to the increase in deposits by individuals in current and saving accounts by 60.9%.

Deposit of commercial banks also increased by 4.28% amounting to Nu 8.4mn. however, deposits from private companies dropped by 4.5% amounting to Nu 9mn this year.

In terms of deposits by customer type, retail deposits account for 61.5% amounting to Nu 121mn, and the remaining 38.5% amounting to Nu 57.9mn comprises of corporate deposits. Of the total retail deposits, around 95% consist of individual deposits.

Local Economists said that deposits are the main source of funds for banks. “It is also known as liability for the bank. This is because the banks have to pay the interest on deposits. So, the banks lend in the market with some margin.”

He added that to ensure risks are adequately covered, the central bank’s prudential rules and regulations mandate that banks must set aside some portion of the deposits and quick assets. “These requirements such as cash reserve ratio and statutory liquidity ratio are well met by the banks,” he said.

An official from the RMA said that with an increase in deposits during the same period, financial sectors’ total loans to the economy have also increased by 9.2%, from Nu 175mn in last year to Nu 191mn in September this year.

Kinley Yonten from Thimphu