The Nepal Bankers Association has decided to end the gentleman’s agreement on interest rates to be provided by bank.
A meeting of the association on Thursday to end the interest rate cartelization.
Representatives from all 20 commercial banks participated in the meeting with the objective of putting an end to cartelization practices related to interest rates.
The executives are confident that ending cartelisation will foster an environment of fair competition and enhance transparency in the banking sector.
Sunil KC, president of the Association, said bank can now individually determine fixed deposit interest rates from July 17 onwards.
Currently, the interest rate on regular fixed deposits is set at 9.99 per cent. However, with the recent delegation to individual banks, they now have the flexibility to increase or decrease the interest rate by up to 10 per cent.
This means that if a bank decides to raise the interest rate, it could potentially reach around 11 per cent, while a decrease would bring it down to approximately 9 per cent. The adjustment of interest rates within this range allows banks to adapt to market conditions and cater to the preferences of their customers.
A few years ago the banks shook on a gentleman’s agreement, as there was a liquidity crisis in the country. Now with liquidity under control, the banks are back competing against each other.
