SATV, Kathmandu, October 3 - Banks and financial institutions in Nepal are currently facing no shortage of funds. Instead, money has accumulated in the banking system, while demand for loans remains sluggish and interest rates continue to decline. The structure of deposits has also been changing, with the share of fixed deposits, which once stood well above ordinary savings, declining steadily in recent years while ordinary savings deposits have started to rise again.

Data from the past decade show significant changes in the structure of deposits in Nepal’s banking system. In 2016, ordinary savings accounted for a larger share of total deposits than fixed deposits. However, fixed deposits overtook ordinary savings during periods of liquidity shortages and high interest rates. By 2023, fixed deposits had reached a decade-high share of 58.2 percent of total deposits. Since then, their share has continuously declined, reaching 46.8 percent in 2026, while ordinary savings stood at 35.2 percent.

Banks and financial institutions collected total deposits of Rs 2.108 trillion in 2016. At that time, ordinary savings accounted for 41.5 percent of total deposits, fixed deposits for 29.3 percent and current accounts for 19.1 percent.

The deposit structure changed in subsequent years. Total deposits reached Rs 2.386 trillion in 2017. That year, the share of fixed deposits increased to 41.9 percent, while ordinary savings accounted for 34.2 percent and current accounts for 14 percent.

In 2018, total deposits reached Rs 2.837 trillion, with fixed deposits accounting for 43.3 percent, ordinary savings 33.4 percent and current accounts 13 percent. In 2019, total deposits stood at Rs 3.354 trillion. Fixed deposits accounted for 45.5 percent, ordinary savings 31.6 percent and current accounts 12.4 percent.

In 2020, total deposits reached Rs 3.929 trillion. Fixed deposits accounted for 48 percent, while ordinary savings represented 31.2 percent and current accounts 9.7 percent.

In 2021, total deposits reached Rs 4.740 trillion. The share of fixed deposits declined slightly to 46.7 percent, while ordinary savings accounted for 33.6 percent and current accounts 8.4 percent.

The share of fixed deposits then rose sharply again. In 2022, total deposits reached Rs 5.159 trillion, with fixed deposits accounting for 55 percent. Ordinary savings represented 27.2 percent and current accounts 7.6 percent.

In 2023, total deposits reached Rs 5.771 trillion, with fixed deposits accounting for a decade-high 58.2 percent. Ordinary savings stood at 26.3 percent and current accounts at 6.8 percent.

A banker said the shortage of liquidity in the banking system had prompted banks and financial institutions to raise deposit interest rates, directly affecting the structure of deposits.

“When there was a liquidity crisis in the banking system, interest rates had risen significantly. In 2016, ordinary savings accounted for 41.5 percent of total deposits. After that, fixed deposits overtook ordinary savings,” the banker said.

According to the banker, depositors were increasingly attracted to fixed deposits because they could earn higher returns by keeping their money for a fixed period.

“As the share of fixed deposits increased, it reached around 58 percent in 2023. At that time, bank interest rates were also high,” the banker said. “When fixed deposits increased, banks’ base rates also rose. As base rates increased, lending rates also became higher.”

The structure of deposits began changing again after 2023. As interest rates declined, the share of fixed deposits also started falling.

In 2024, total deposits reached Rs 6.496 trillion. The share of fixed deposits declined to 56.1 percent, while ordinary savings increased to 30.1 percent. Current accounts accounted for 7.3 percent.

In 2025, total deposits reached Rs 7.304 trillion, while the share of fixed deposits fell further to 48 percent. The share of ordinary savings increased to 36.6 percent, while current accounts accounted for 7.5 percent.

In 2026, total deposits in banks and financial institutions have reached Rs 8.311 trillion. Fixed deposits account for 46.8 percent of total deposits, ordinary savings 35.2 percent and current accounts 9 percent.

Thus, the share of fixed deposits has declined by 11.4 percentage points over three years, from 58.2 percent in 2023 to 46.8 percent in 2026. During the same period, the share of ordinary savings increased from 26.3 percent to 35.2 percent.

Bankers say liquidity remains sufficient in the banking system despite the changing deposit structure. They say banks currently have adequate funds, but demand for loans remains weak.

“Money is piled up in banks. People have stopped coming to banks to seek loans. Banks have as much money as they need, but there is no one coming to borrow,” a banker said.

According to the banker, the current challenge for banks and financial institutions is not raising funds but channeling available resources into productive sectors.

As interest rates decline, the gap between the interest rates offered on fixed deposits and ordinary savings is also narrowing. Bankers believe that under such circumstances, depositors are increasingly choosing savings accounts, where funds can be accessed easily when needed, instead of locking their money away for a fixed period.

An official at the Employees Provident Fund said banks and financial institutions are currently asking institutions not to keep excess money with them.

“Banks pay only 0.5 percent interest on call accounts. Yet, when they need to withdraw money from those call accounts, they call us morning and evening,” the official said. “I have worked for three decades, but I have never seen such a situation in the financial system.”