Kathmandu, July 16 -- With just a week remaining in the current fiscal year as of July 10, banks and financial institutions are sitting on Rs1.56 trillion in lendable funds, reflecting a persistent surplus of liquidity in the financial system.

The excess liquidity has continued to grow throughout the fiscal year, just as it did in the previous two fiscal years, as deposits have risen steadily, driven by robust remittance inflows, while demand for loans has remained weak.

The sluggish expansion of bank lending is attributed to subdued market demand, slow economic activity, industries operating at only about 42 percent of their capacity, and a stagnant stock market.

Banking experts say these factors have left financial institutions with ...