Commercial banks in Nepal have reduced their base interest rate to 7.69 percent for the period from mid-September to mid-October, down from 7.92 percent, citing an excess of loanable funds.
According to recent financial reports, this marks a decrease of 0.22 percentage points compared to the previous month, following a prior reduction of 0.25 percentage points. Among the 20 commercial banks, Standard Chartered Bank offers the lowest base rate at 6.03 percent, while state-owned Rastriya Banijya Bank follows with a base rate of 6.37 percent, both down from 6.22 percent and 6.66 percent, respectively.
On the other end of the spectrum, NIC Asia Bank holds the highest base rate at 9.06 percent, a decrease from 9.22 percent last month, while Kumari Bank’s base rate is now 8.46 percent, down from 8.90 percent.
Despite a trend of declining lending rates since May 2024, banks are struggling to expand their loan portfolios due to a sluggish economy. Although many banks have launched attractive offers to entice borrowers, these efforts have not yielded significant results.
Data from Nepal Rastra Bank (NRB) indicates that as of Sunday, commercial banks have collected deposits totaling Rs 5.839 trillion and issued loans amounting to Rs 4.643 trillion. This results in a credit-to-deposit ratio of 78.51 percent, well below the regulatory threshold of 90 percent.
With banks experiencing excess liquidity, the NRB has taken steps to absorb Rs 6.708 trillion from the market in the first two months of the current fiscal year. Of this amount, Rs 6.270 trillion has been parked in the standing deposit facility, while Rs 438.20 billion has been deposited through a bidding process. Despite these efforts, banks reported excess liquidity of Rs 229.40 billion as of mid-September.
