"Situation has certainly changed

A year later, banks are again filled with cash as Nepalis working abroad are continuing to send money, lending to the speculative real estate sector has stopped and funds parked in development banks and finance companies have migrated to commercial banks owing to their weak fiscal compliance.

Unfortunately, even at a time when excess liquidity hovers at over Rs 40 billion and deposit rates have fallen down to an average of eight percent, Lumbini Bank and Agricultural Development Bank are still paying high interest on funds borrowed to create cushion.

Little wonder their cost of fund -- the price banks have to pay to use borrowed money -- went up in the last fiscal year that ended on July 15.

"Situation has certainly changed now. But at the peak of the crisis, we predicted liquidity shortage to continue for at least three to four years," Shovan Dev Pant, CEO of Lumbini Bank,, justifying the action taken around a year ago.