3. DEFINITION
A state in which there is a short supply of
cash to lend to business and consumers and
interest rate is high. There is less
availability of credit.
4. BACKGROUND
Per –capita income of an average
Nepali is about $730.
Less income, so less saving which
automatically leads to less investment.
6. 1. Difference in Import and Export
Export by
18.7%
Import by
32.8%
About 8 billion money has frozen in Hong kong to import wool.
CAUSES
7. 2. Increased Living Standard
Consume more and more of luxurious
goods.
This results in outflow of cash.
8. 3. Investment greater than the deposit.
Credit increased by 13.4% (about 54.38 billion)
Last year it was 10.2% (31.4 billion)
75 billion 40 billion
9. 4. Increased Holding Money
People feel safe to have money in
hand rather than bank.
About 20 million cash is frozen in
ATM machine.
10. IMPACTS
Shortage of loan in market
Higher interest rate
Fluctuation in interest rate
Increase in operation cost
Increase in commodity price
Halt in loans for automobiles and real
state
11. REMEDIES
NRB injected about Nrs.20 billion through
Repo.
NRB strictly prohibited to invest more then 40%
in real state and housing loan.
NRB has seek help from World Monetary Fund
incase of emergency.
Government decided to invest in development
projects
12. CONCLUSION
Though factors like decreasing remittance
rate, increasing investment in unproductive
area will increase economic crisis. But also
experts say still Nepal is not really in crisis.
But, if ongoing condition continues, there
will really be economic crisis. So more
effective steps are expected.