Insurers' investment in bank fixed deposits nears Rs 7 trillion, public deposits exceed Rs 53 trillion

Kathmandu. Although insurance companies are required to invest in various sectors, a large share of their investments appears concentrated in bank fixed deposits. Data published by Nepal Rastra Bank for the first month of the current fiscal year 2083/84, up to Shrawan, shows that insurers' such investments increased marginally over the past year.

Nepal currently has 14 life insurance, 14 non-life insurance, 4 micro non-life insurance, 3 micro life insurance, and 2 reinsurance companies in operation. Under regulatory provisions, insurers may invest in fixed deposits up to 30 percent of their total investable funds in commercial and infrastructure banks, 10 percent in development banks, and 5 percent in finance companies.

By the review period, insurance companies had invested Rs 673.53 billion in bank fixed deposits. In the same period of the previous fiscal year 2082/83, such investment stood at Rs 671.54 billion. Compared with the previous year, insurers' investment rose 0.29 percent in the review year.

During the same period, other institutional investors also held notable investments in bank fixed deposits.

• Employees Provident Fund: Investment of Rs 195.51 billion up to Shrawan of the current year, up 10.15 percent from Rs 177.50 billion a year earlier.
• Citizen Investment Trust: Investment of Rs 150.79 billion in the review period, down 16.10 percent from Rs 129.88 billion a year earlier.

Meanwhile, public deposits in banks have increased significantly. In the review year, public deposits in banks stood at Rs 5.384 trillion. In the same period last year, such deposits were Rs 4.580 trillion. Public deposits rose 17.55 percent compared with the previous year.

Overall, while insurers' investment growth appears sluggish, the high growth in public deposits signals improving liquidity in the banking system.