Strong Growth in Bank Deposits Signals Improved Liquidity in Nepal's Financial System

Nepal’s banking sector has witnessed a consistent rise in total deposits over the past six fiscal years, indicating growing public trust in the financial system and improved liquidity conditions. According to the latest financial data, total deposits in the country reached Rs. 6,820.9 billion by mid-April 2024/25, marking a significant year-on-year growth compared to Rs. 6,119.1 billion recorded in mid-April 2023/24. This represents a robust increase of over Rs. 701.8 billion within a year, driven by higher remittance inflows, moderate inflation, and better economic confidence.

Looking at the annual figures, the deposits have grown steadily from Rs. 3,839.7 billion in 2019/20 to Rs. 6,452.4 billion in 2023/24, an increase of nearly 68% over five years. This upward trend has been particularly strong post-pandemic, with deposits jumping from Rs. 5,082.8 billion in 2021/22 to Rs. 5,710.0 billion in 2022/23, and further to Rs. 6,452.4 billion in the last fiscal year. Such consistent growth reflects both the expansion of the formal banking network and a shift in public behavior towards saving in regulated financial institutions.

The dip in deposit figures from the annual total of Rs. 6,452.4 billion in 2023/24 to Rs. 6,119.1 billion in mid-April 2024 suggests some seasonal or fiscal withdrawals, likely due to tax payments or year-end cash outflows. However, the rebound to Rs. 6,820.9 billion by mid-April 2024/25 shows strong deposit recovery and points to an overall healthy liquidity position within the banking system. This is also a sign of macroeconomic stability, backed by controlled inflation, improved remittance growth, and cautious consumer spending.

Such rising deposit trends are critical for the banking sector, as they enhance the banks’ lending capacity and support domestic credit growth. It also reflects improved financial inclusion as more citizens and businesses utilize banking services for savings and transactions. Moreover, higher deposits contribute to financial resilience, enabling banks to better manage risks and maintain capital adequacy.

In summary, Nepal’s deposit growth trend over recent years paints a positive picture of the country’s financial sector. The sharp recovery and record-high deposit levels in mid-April 2025 underscore increased public confidence and provide a strong foundation for sustained economic activity in the coming fiscal year.