KATHMANDU, Sept 15: Nepali commercial banks will be raising their interest rates on fixed deposits after the Nepal Bankers’ Association (NBA) decided not to intervene in the banks to fix their interest rates.
According to the bankers, the NBA meeting held on Thursday, decided not to get involved in fixing the interest rates being provided by individual banks. Earlier, the banks went to consensus on not altering interest rates despite facing the liquidity shortage with them.
Due to the consensus, the interest rate had remained stable for the past six months although Nepal Rastra Bank (NRB) through the monetary policy has been pressing the banks to increase their interest rates. The International Monetary Fund has also recommended to the central bank to increase the banks’ interest rates, citing the ongoing liquidity crisis.
On an average, banks have been offering interest rates of 11.03 percent per annum on fixed deposits of individuals. In the case of institutional depositors, the interest rate is 9.03 percent.
The NRB has asked the banks not to raise interest rates more than 10 percent at a time. Based on the central bank’s rule, the interest rate on fixed deposits of individuals will reach up to 12.13 percent per annum.
Earlier, the NRB had also issued a circular allowing banks to revise their interest rates on deposits every month if they like. But the banks can change lending rates only on a quarterly basis.