Liquidity
The credit to deposit ratio (CDR) is a major tool to
examine the liquidity of a bank and measures the ratio of
fund that a bank has utilized in credit out of the deposit
total collected. Higher the CDR more the effectiveness of
the bank to utilize the fund it collected.
As per the Table 1, column 7, the CDR of the public
banks shows that their liquidity position was lower than
the accepted level. However, ADBL was seemed to more
efficient to utilize their funds collected as deposit. During
the study period, the average CDR of NBL was 39.58%
while that of RBBL was 51.14% and ADBL was 111.01%.
Although there is no standard for CDR in Nepal, a ratio
of 75% can be accepted to be adequate. The CDR of the
bank was quite consistent over the past five years
beginning from 2005-2010. Among the six joint venture
banks, the average CDR of NBBL was higher than other
JV banks. In an average, the bank has been able to
utilize two-third portion of the depositors fund in the form
of credit. The CDR of domestic private banks was in the
accepted level. The CDR of domestic private banks was
higher than 75% level, which is adequate.
In order to rank the banks, SBL was the first one; it has
an average CDR of 93.04%. The second position was for
LBL bank with CDR equaled to 90.21%, and the last
position was belonged to NIBL bank with 76.01%. It
seems domestic private banks are efficient to utilize the
funds collected as deposit.