Commercial banks in Nepal have further reduced deposit interest rates for the month of Jestha, mainly due to excess liquidity in the banking system and sluggish credit expansion.
Following the common practice of publishing interest rates on the last day of each month for implementation in the upcoming month, banks released their revised interest rate lists for Jestha on Thursday.
Compared to Baisakh, seven commercial banks lowered the maximum interest rate on individual fixed deposits for Jestha, while 13 banks maintained the same rates as the previous month. The reduction by several banks has brought down the overall average interest rate.
The average maximum interest rate offered by commercial banks on individual fixed deposits declined by 0.0595 percentage points. The average maximum rate, which stood at 4.4025 percent in Baisakh, has dropped to 4.343 percent in Jestha. This rate is now lower than the consumer inflation rate recorded in Chaitra.
Most banks have set interest rates on individual fixed deposits between 4 percent and 4.5 percent. According to Nepal Rastra Bank, consumer inflation in Chaitra stood at 4.47 percent.
The fact that the maximum fixed deposit interest rate has fallen below the inflation rate has drawn growing concern within Nepal’s financial sector.
