A number of commercial banks and development banks have reduced the interest rates on their deposit collection effective from Friday.
According to a notice issued by the concerned banks, a total of 13 commercial banks have revised their interest rates on both the personal and institutional deposits. While the maximum interest rates on individual deposits have been reduced to 9.632 percent from 9.964 percent, the one on institutional deposits is down to 7.546 percent from 7.8526 percent.
Out of 13 commercial banks that have revised interest rates, NIC Asia is the topmost in reducing its interest rates. The bank has announced to reduce the interest rates by 2.035 percent to 8.968 percent. NMB Bank was the second in the row, reducing its interest rate by 1.243 percent to 9.76 percent.
Five commercial banks have left their interest rates unchanged while Machhapuchchhre Bank has raised its interest rate to 10.60 percent per annum. In the revised rates, Nepali commercial banks will now be offering interest rates on the fixed deposits between 5.25 percent and 10.603 percent.
For the past few months, banks have had an excess amount of loanable funds with them, due to low demand for borrowing while having increasing deposits. Due to the prevailing high interest rates on loans, banks have failed to mobilize their funds effectively, according to bankers.
Citing the low demand for loans, banks reduced their base interest rates by 0.13 percent in the past one year. As of mid-October last year, the average base rate of the commercial banks was 10.11 percent, which came down to 9.98 percent a month ago.
Sunil KC, president of the Nepal Bankers’ Association, said banks have been charging minimum premium rates on top of base rates while issuing loans. “Although the base rates have been down by a notable rate, banks have failed to expand their credit portfolio in recent days.”
Meanwhile, the national level development banks have also announced plans to reduce their interest rates to single digit effective from Friday. As per the public notice issued by these development banks, five have reduced their average interest rate to 9.74 percent, down from 10.25 percent earlier.
Out of eight national level ‘B’ class banks, Lumbini Development Bank and Shangri-la Development Bank, however, have raised their interest rate by 0.35 percent to 10.60 percent.
