KATHMANDU, Nov 16: Commercial banks have lowered their average interest rates for the month of Mangsir (mid-November to mid-December), according to the latest data published by 20 commercial banks. The newly released rate sheets show that interest rates have declined compared to those offered in Kartik (mid-October to mid-November).
The maximum average interest rate on individual fixed deposits has dropped by 0.16 percentage points, falling from 5.2005 percent in Kartik to 5.0405 percent for Mangsir.
The highest return offered on individual fixed deposits remains at 6 percent, a rate maintained by Global IME Bank for deposits with a maturity period of three years or more.
Revised interest rate corridor system introduced
Out of the 20 commercial banks, 10 banks have reduced their maximum interest rates for individual fixed deposits, while the remaining 10 banks kept their rates unchanged. This combination resulted in an overall decline in the average rate.
Banks that reduced their fixed-deposit rates include NIC Asia, Prime Commercial, Standard Chartered, Nabil, Siddhartha, Kumari, Sanima, Himalayan, Nepal SBI, and Citizens Bank.
Institutions that kept their rates unchanged are Agricultural Development Bank, Everest Bank, Nepal Bank, Laxmi Sunrise, Machhapuchchhre, Prabhu Bank, Rastriya Banijya Bank, Global IME, Nepal Investment Mega Bank, and NMB Bank.
Banks generally offer lower returns on short-term fixed deposits and relatively higher rates for longer maturities, particularly for deposits exceeding five years.
A decline in interest rates on personal fixed deposits typically affects savings and institutional deposit rates as well, which consequently reduces the base rate and leads to cheaper lending.
According to Nepal Rastra Bank, the decline in rates is largely due to excess loanable funds in the banking system and limited credit demand. The central bank has also been withdrawing liquidity from the market through instruments such as deposit collection and the Standing Deposit Facility to manage overall liquidity conditions.
NRB’s current policy rate stands at 4.5 percent, with the Standing Liquidity Facility rate at 6 percent and the Standing Deposit Collection Facility rate at 2.75 percent.
