KATHMANDU, March 12: Commercial banks have experienced a decline in their weighted average interest rate on loans. According to the latest report published by Nepal Rastra Bank, the average interest rate on loans of commercial banks in the month of Magh (mid-January to mid-February) stood at 8.55 percent. The weighted average interest rate on loans was 11.08 percent in the corresponding month of the previous fiscal year.
Similarly, the weighted average interest rates on loans of development banks and finance companies in the review month stood at 9.90 percent and 10.88 percent, respectively. In the corresponding period of last FY, the weighted average interest rate on loans of development banks was 12.85 percent and finance companies was 13.93 percent. The significant reduction in the interest rate on loans of banks is due to the decrease in the average base rate.
Revised interest rate corridor system introduced
The average base rate of commercial banks has now fallen to 6.46 percent. In Asoj (mid-September to mid-October), the average base rate of commercial banks was 9.06 percent. Due to higher liquidity in banks, BFIs have also reduced the premium rate added when determining the interest rates on loans.
Banks used to add a premium of up to 5 percentage points when liquidity was low. However, they have now started providing loans by adding a premium of 1.5 percentage points.
