For the month of Ashoj (mid-September to mid-October), commercial banks have further reduced deposit interest rates. The average rate on personal fixed deposits at 20 banks has dropped by 0.15 percentage points from Bhadra (mid-August to mid-September). In Bhadra, the highest average interest rate was 6.54%, which has decreased to 6.39% in Ashoj. This marks a reduction from the 6.73% average in Shrawan (mid-July to mid-August).
Two banks, Agriculture Development Bank and Nepal Bank, have increased their maximum deposit rates compared to Bhadra, while ten banks have lowered theirs, and eight have kept them unchanged. Banks that have reduced their rates include Rastriya Banijya Bank, Nepal SBI, Kumari, Prime, Sanima, Citizens, Nabil, NMB, NIC Asia, and Everest. Laxmi Sunrise, Global IME, Nepal Investment Mega, Siddhartha, Standard Chartered, Machhapuchhre, Prabhu, and Himalayan have maintained their rates.
NIC Asia Bank offers the highest interest rate at 7.18% in Ashoj, down from 7.41% in Bhadra. Conversely, Sanima Bank provides the lowest rate at 5.9%. The trend indicates that banks are offering slightly higher rates for long-term deposits and lower rates for short-term ones. This reduction in deposit rates is expected to lower loan interest rates, benefiting borrowers.
The Nepal Rastra Bank (NRB) mandates that the difference between the highest personal fixed deposit rate and the lowest savings account rate should not exceed five percentage points. Institutional fixed deposits must offer at least one percentage point less than personal fixed deposits. Personal and remittance fixed deposits can offer up to one percentage point more.
Despite having sufficient funds, banks have seen increased costs due to inadequate loan disbursement. The NRB has been absorbing excess liquidity through bidding instruments, mopping up Rs 100 billion on Sunday and Rs 50 billion on Monday. This trend of decreasing deposit rates is linked to ample liquidity and a reduced policy rate of 5%, with an upper interest rate corridor of 6.5%, as noted by Sunil KC, Chairman of the Bankers’ Association of Nepal.
