Kathmandu: Nepali commercial banks have once again lowered deposit interest rates for the coming month, reflecting continued excess liquidity in the country’s banking system and sluggish demand for loans.
According to interest rate notices published by all 20 commercial banks, the average interest rate on individual fixed deposits has been reduced by 0.09 percentage points, falling from 4.26 percent to 4.17 percent for the period between mid-July and mid-August.
Similarly, the average interest rate on institutional deposits has been lowered from 3.18 percent to 3.12 percent.
Six Banks Reduced Rates
Among the 20 commercial banks, six banks revised their deposit rates downward.
- Rastriya Banijya Bank announced the largest reduction, cutting personal deposit rates by 0.75 percentage points.
- Global IME Bank reduced rates by 0.50 percentage points.
- NMB Bank lowered rates by 0.25 percentage points.
- Citizens Bank International reduced rates by 0.15 percentage points.
- Standard Chartered Bank Nepal trimmed rates by 0.10 percentage points.
- Kumari Bank made the smallest reduction of 0.06 percentage points.
The remaining commercial banks kept their rates unchanged for the month.
Nabil and Prabhu Offer Highest Returns
Despite the overall decline, Nabil Bank and Prabhu Bank continue to offer the highest interest rates on individual fixed deposits, with returns of up to 4.55 percent per annum.
At the lower end, Kumari Bank and Standard Chartered Bank Nepal are offering a maximum deposit rate of 3.85 percent.
Banks also continue to provide one percentage point higher interest on remittance savings accounts than on ordinary personal fixed deposits to encourage remittance inflows through formal banking channels.
Excess Liquidity Behind Rate Cuts
Bankers attribute the continued decline in deposit rates to the banking sector’s persistent excess liquidity.
Banks and financial institutions currently have more than Rs 1.3 trillion in loanable funds that remain unutilized due to weak private-sector credit demand. As a result, a significant portion of idle funds is being parked at Nepal Rastra Bank (NRB), where they earn only 2.5 percent interest.
Deposits Continue to Rise
According to banking sector data, total deposits in banks and financial institutions have reached approximately Rs 8.28 trillion, while total outstanding loans stand at around Rs 5.63 trillion.
Analysts say strong remittance inflows—now exceeding Rs 200 billion per month—have continued to swell bank deposits. However, weak economic activity, cautious lending by banks, and subdued private-sector investment have prevented credit growth from keeping pace.
With liquidity expected to remain comfortable in the near term, market observers believe deposit interest rates are likely to stay under downward pressure unless loan demand strengthens significantly in the coming months.
