KATHMANDU, Dec 16: Commercial banks have announced revised interest rates on deposits for the month of Paush (mid-December to mid-January), in response to the reduced policy rate and bank rate by Nepal Rastra Bank (NRB).
Eighteen banks publicly announced to have reduced interest rates compared to Mangsir (mid-November to mid-December) in both individual and institutional deposits, while two have maintained constant interest rates. Prabhu Bank and Sanima Bank have retained the same interest rates for the review period.
The average interest rate of commercial banks has been decreased by 0.62 percentage points to 8.99 percent for the next month starting from Sunday. With the revision, the prevailing average interest rate is 9.91 percent per annum.
Revised interest rate corridor system introduced
Himalayan Bank has come up with the most significant reduction in interest rates. The bank's maximum interest rate on personal term deposits was 10.603 percent during mid-November to mid-December, while it has been reduced by two percentage points to 8.603 percent for the next month.
Similarly, Citizens Bank has lowered the interest rate on deposits by 1.35 percentage points. Everest Bank, Global IME Bank, Laxmi Sunrise Bank, Machhapuchhre Bank and Nepal SBI Bank have all reduced interest rates by 1 percentage point.
Three state-owned banks that include Nepal Bank Limited, Agriculture Development Bank and Rastriya Banijya Bank have lowered their interest rates on individual savings to 8.55 percent, 9.01 percent and 8.61 percent, respectively. Depositors will receive the highest interest if they deposit their money in Prime Commercial Bank.
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 market interest rates. The banks have been prompted to reduce their interest rates after the NRB turned flexible through the revised monetary policy last week. The central bank 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.
A number of banks have already started to reduce their interest rates since the past one month after they were left with an excess amount of loanable funds with them. The NRB records show that commercial banks have a total deposit portfolio of Rs 5.989 trillion while they provided loans of Rs 4.989 trillion.
