KATHMANDU: Nepal’s commercial banks have directed a substantial portion of their investment portfolios towards government bonds, with 78% of their total investments now in these instruments, according to a recent report from the Supervision Department of Nepal Rastra Bank (NRB).
The data reveals that commercial banks have invested Rs 918 billion in government-issued credit instruments, reflecting a significant commitment to government bonds. In contrast, their investment in bonds issued by the NRB stands at Rs 16 billion.
In addition to government bonds, the banks have allocated Rs 93 billion towards shares and debentures in the secondary market. Interbank investments amount to Rs 6 billion, and they have maintained Rs 2 billion in fixed deposits.
The heavy investment in government bonds underscores the banks’ preference for stable and secure investment options, particularly in the current economic climate. This trend also highlights the role of commercial banks in supporting government financing through substantial purchases of government-issued credit instruments.
The NRB’s report provides a detailed breakdown of the banks’ investment strategies, illustrating their cautious approach in diversifying their investment portfolios while prioritizing government securities. This focus on government bonds aligns with broader efforts to maintain financial stability and manage risk within the banking sector.
As Nepal navigates its economic challenges, the significant investment in government bonds by commercial banks is seen as a stabilizing factor, providing a reliable source of funding for the government while ensuring a secure investment avenue for the banks.