KATHMANDU, July 15: The average base interest rate of the bank and financial institutions (BFIs) has gone down to the lowest in the past five years, with an excess liquidity existing in the sector as an impact of the coronavirus.
According to the 11 months’ report on the Current Macroeconomic and Financial Situation published by Nepal Rastra Bank (NRB) on Thursday, the base rate has plunged to 6.66 percent by mid-June this year. The base rate in the last one year went down by 2 point percent from 8.66 percent to 6.66 percent during mid-June 2020 and mid-June 2021.
Revised interest rate corridor system introduced
Five years ago, it stood at 6.55 percent in November 2016/17.
The base rate is the minimum rate set by the regulator below which BFIs are not allowed to lend. BFIs charge a lending rate by adding interest premium on their base rate. A lower base rate also indicates the lower lending rate charged by the banks on the borrowers.
Just in one month from mid-May to mid-June this year, the base rate went down by 0.17 point percent.
