al institutions, including 20 commercial banks, 17 development banks, 17 finance companies, 52 microfinance financial institutions and 1 infrastructure development bank, are in operation.

The branches of commercial banks have been established at all local levels of the country. The government had set a target of expanding the services of commercial banks in all 753 local levels.

On a year-on-year basis, deposits of banks and financial institutions have increased by 9.5 per cent to Rs. 6,729.62 billion as of mid-March 2025. Such deposits were Rs. 6,145.88 billion a year ago.

Similarly, loan disbursements from banks and financial institutions to the private sector have increased by 7.7 per cent to Rs. 5,378.78 billion as of mid-March of 2025. Such loans were Rs. 4,996.53 billion same period last year.

However, the survey pointed out a decline in interest rates. The weighted average interest rate on deposit dropped to 4.54 per cent from 6.74 per cent a year ago, while the interest rate on loan rate fell to 8.40 per cent from 10.78 per cent.

Despite these positive developments, the banking sector still faces rising risks. The average non-performing loan (NPL) ratio climbed to 4.92 per cent in mid-January 2025, up from 3.73 per cent in mid-January 2024, raising concerns about asset quality and credit risk.