A number of commercial banks have started lowering their interest rates on deposits after Nepal Rastra Bank (NRB) turned lenient in its policy rate and bank rate through the first quarterly review of the monetary policy.
Public notices published by the banks show that they have reduced their interest rates by one percentage point on fixed deposits. With the revision, the interest rate has come down to as low as seven percent.
NIC Asia Bank reduced its interest rate to 7 percent on fixed deposits with maturity of up to six months. The interest rate for more than two years’ fixed deposit is 8.67 percent per annum. Likewise, NMB Bank has also announced plans to reduce its interest rate to 9 percent from 9.76 percent.
As of now, most of the banks have been offering an interest rate of double-digit on deposits. They have announced to reduce the rate to single digit effective from Sunday.
According to bankers, the drop in interest rates on deposits indicates that the banks are likely to reduce the interest rates on their loans very soon. Sunil KC, president of Nepal Bankers’ Association, said the banks are now in a position to lower interest rates due to the central bank’s lenient policy.
Through the revised monetary policy unveiled on Friday, the NRB has reduced the bank rate from 7.5 percent to 7 percent, while the policy rate has also been revised to 5.5 percent from the existing 6.5 percent. Citing the ongoing economic slowdown in the country, the private sector has long been pressuring the central bank to enforce lenient policy to take down the interest rates.
A number of banks have already started to reduce their interest rates in the past one month after they were left with an excess amount of loanable funds. The NRB records show that commercial banks have a total deposit collection of Rs 5.289 trillion while they provided loans of Rs 4.407 trillion.
