The average base interest rate of Nepal’s commercial banks has dropped to a three-year low of 6.48 percent as banks struggle to issue loans in significant amounts.
According to statistics from 20 commercial banks, the base interest rate decreased by 0.15 percentage points between mid-March and mid-April, down from 6.63 percent in the previous month. A bank’s lending rate is determined by adding a premium to the base rate, which typically ranges from 1.5 to 5 percentage points, depending on the nature of the loan and associated risk factors.
Among individual banks, Standard Chartered Bank Nepal has the lowest base rate at 5.03 percent, followed by Rastriya Banijya Bank at 5.28 percent, Everest Bank at 5.46 percent, and Nepal Bank Limited at 5.96 percent. On the higher end, NIC Asia Bank has the highest base rate at 7.41 percent, with Prime Bank following at 7 percent. Among state-owned banks, the Agriculture Development Bank has the highest base rate at 6.52 percent. The remaining 14 commercial banks have base rates ranging between 6 and 7 percent.
Since May 2024, banks have maintained their average base rate in single digits. However, despite the decline in lending rates, they have struggled to expand their loan portfolios due to the ongoing economic slowdown.
According to Nepal Rastra Bank, as of Monday, commercial banks had collected total deposits of Rs 6.060 trillion and issued loans worth Rs 4.853 trillion. The credit-to-deposit ratio stood at 79.31 percent, well below the regulatory threshold of 90 percent. Despite a slight improvement in lending, banks still hold excessive loanable funds exceeding Rs 700 billion.
