Commercial banks announce new interest rates

Two days after Nepal Bankers Association (NBA) decided to let the banks set their own interest rates, commercial banks on Sunday published their new interest rates for the month of Shrawan (mid-July to mid-August).

With the banking system flushed with excess liquidity, the NBA, an association of commercial banks’ CEO, on Thursday decided to allow the banks set the interest rate themselves, doing away with the long-standing interest rate cartelization practice.

Of the 21 commercial banks, four banks have decided to increase the interest rate on deposits, ten banks to decrease while six banks have kept the deposit interest rate as it is.

Sudesh Khaling, Chief Executive Officer (CEO) of Everest Bank said that banks have fixed the interest rate of deposits based on their requirements. "Banks having more deposits have reduced interest rates while those that need deposits have increased," said Khaling.

Since there is a low demand for loans, the majority of banks have lowered their interest rates. “This is what happens in an open and free market. Diversification in interest rates also gives customers the opportunity to choose the banks,” said Khaling.

The NMB Bank, Nabil Bank, Prime Commercial Bank, and Kumari Bank have increased the interest rate on deposits.  Nabil Bank has increased its maximum interest rate to 10.49 percent for fixed deposits. The bank has offered 5.90 to 7.90 interest rates for saving accounts. 

 

Among the commercial banks, NMB Bank has offered the highest interest rates on fixed deposits. The bank has introduced fixed interest rates for different periods, ranging from a minimum of nine percent to a maximum of 10.98 percent. The bank’s savings account holders will get interest rates from 5.98 to 7.98 percent.

Prime Commercial Bank has fixed interest rates of up to 10.93 percent for fixed deposits. As for the savings accounts, the bank has offered interest rates of 5.93 to 7.93 percent.

Nepal Investment Mega Bank, Global IME Bank, Lakshmi Sunrise Bank, Nepal SBI Bank, Himalayan Bank, and Citizens Bank have decided to maintain their existing interest rates.  The interest rate on fixed deposits of these banks stands at 9.99 percent.

While some banks have adjusted their interest rates upwards, others have opted to lower them. Rastriya Banijya Bank, Prabhu Bank, Nepal SBI Bank, Machhapuchhre Bank, Everest Bank, Standard Chartered Bank, Siddhartha Bank, Sanima Bank, Nepal Bank, and Agricultural Development Bank have all reduced their interest rates.

Standard Chartered Bank Nepal has the lowest interest rate of 8.95 percent for fixed deposits. The bank has offered 8.95 percent interest on individual fixed deposits and 6.95 percent interest on institutional fixed deposits.

Commercial banks had decided to keep the deposit interest rate unchanged for the month of Ashad (mid-June to mid-July).

Currently, the banking system has deposits amounting to Rs 5,730bn, while loans totaling Rs 4,853bn. Since Baisakh, the banking system has collected Rs 242bn in deposits. In the first three weeks of Ashad (the last month of the fiscal year), Rs 147bn in deposits have been added to the banking system. With the improvement in liquidity, the CD ratio currently stands at 81.75 percent. Banks can provide loans with a CD ratio of up to 90 percent.

After reducing the deposit interest rate in Baisakh (mid-April to mid-May), the NBA, the association of CEOs of commercial banks, decided to keep it unchanged for the month of Jestha (mid-May to mid-June).

In Baisakh, under huge pressure from the private sector, NBA lowered the deposit interest rate to 9.99 percent for individual depositors. Similarly, the interest rate for institutional deposits was lowered to 7.99 percent from 9 percent.