The total deposit base of banking sector increased from Nu 97B in 2016 to Nu 109B in December, up by 17.6 percent.

The Royal Monetary Authority’s (RMA) financial sector review report attributed the rise to Nu 12B increase in current and saving account, which constituted 54 percent of the total deposit.

Individual savings constituted 78 percent of the current and saving accounts. Private companies constituted six percent. Compared with 2016, saving accounts deposit increased by almost Nu 4B. Total individual savings, as of December 2017, stood at Nu 28B.

Similarly, the current deposits that are mainly maintained by private businesses also increased from Nu 23B in 2016 to Nu 30.7B, reflecting an increase of more than Nu 7B.

Time deposit, which comprises fixed and recurring deposits, increased by Nu 4.98 billion in December 2017. Time deposits form 46 percent of the total deposits.

The year-on-year growth in the overall deposit base shows that the increase in deposit base was due to the increase in deposits by individual in current and saving accounts by Nu 12B and term deposits by Nu 4billion.

In terms of deposits by customer type, retail deposits accounts for 63 percent (Nu 69B) and remaining 37 percent (Nu 40B) comprises of corporate deposits. Of the total retail deposits, 95 percent consists of individual deposits.

Deposits are the main source of funds for the banks. It is also known as liability for the bank. This is because the banks have to pay the interest on deposit. So, the banks lend in the market with some margin.

However, to ensure risks are adequately covered, the central bank’s prudential rules and regulations mandate that banks must set aside some portion of the deposits and quick assets for rainy days.

These requirements such as cash reserve ratio and statutory liquidity ratio are well met by the banks, according to the report.

With increase in deposit during the same period, financial sectors’ total loans to the economy have also increased by 16.88 percent, from Nu 88.4B in December 2016 to Nu 103.3B in December 2017.

Tshering Dorji