As per the guildlines issued Friday, banks from now on are not allowed to leave an interest rate gap of more than 2 percent on savings accounts offered under different names. [break]
The latest measure, according to NRB spokesperson Gopal Kafle, is aimed at curbing ´bad practices´ of exclusively pledging higher rates to certain groups of clients with saving accounts, while leaving others deprived of their due share of returns.
Commercial banks, development banks and finance companies in recent months unveiled new savings schemes like women´s savings, senior citizens´ savings, children´s savings and privileged saving accounts, pledging as much as 8.5 percent interest returns, whereas they are providing just 2.5 percent interest to salary account holders.
“This is unjustifiable and is hurting depositors. All depositors of banks are equal and they must get equal returns,” Kafle told Republica.
The latest guidelines will bring cheer particularly to loyal and older depositors, because NRB has instructed the BFIs to effect the new interest returns for all clients.
So far, BFIs have been arguing that new rates were effective only for new depositors and special scheme holders, and in the process they were doing an injustice to their most loyal and older clients.
However, bankers have objected strongly to the central bank´s cap on interest rate gap, pointing out that it is a direct control on interest rates. “The central bank has tried to control the prices straightaway. This is nothing but a populist move, which will do no good to the industry,” said Sashin Joshi, president of Nepal Bankers´ Association.
The new guidelines have also restricted BFIs from levying charges other than service charge and loans commitment charge. “This has been provisioned solely to free BFI customers from all hidden costs in the banking system,” said Kafle.
The central bank has also asked BFIs to cite their terms and conditions for loans or any other banking services in clear, comprehensible language. It has instructed BFIs to publish the types and rates of service charges they levy for different services and put that information sheet in a place where clients can see it distinctly.
The banks have also been asked to set up an ´Information and Grievance Desk´ and inform clients about its services. “BFIs can pledge discounts at any time though,” reads the guidelines.
The central bank has also asked BFIs to put an end to the practice of deducting from accounts for failure to maintain the minimum balance set by the banks.
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