Most of the commercial banks in the country have reduced interest rate on deposits for the month of Magh (mid-January to mid-February).
Eighteen out of the 20 commercial banks have lowered interest rates on individual fixed deposits as the banking system grapples with excess liquidity. The credit expansion of commercial banks has consistently lagged behind deposit growth in recent months.
Banks, which are sitting on a substantial amount of loanable funds amid slow credit expansion, have adopted a strategy of lowering the cost of funds by reducing interest rates on deposits.
Class ‘A’ banks, which previously had a gentleman’s agreement on fixing interest rates collectively, have broken the ‘cartel’ and have been publishing rates individually since the beginning of the fiscal year 2023/24 in mid-July last year.
The Nepal Rastra Bank (NRB) requires commercial banks to maintain a maximum difference of five percentage points between the lowest rate on savings and the highest interest rate offered on individual fixed deposits. Similarly, banks cannot change interest rates by more than 10 percent compared to the previous month.
Out of the 20 commercial banks in the country, Everest Bank Ltd and NMB Bank Ltd have kept the interest rates on personal fixed deposits unchanged at eight percent and nine percent, respectively, compared to the previous month. Consumers of NMB, however, can get nine percent interest rate only on fixed deposit schemes of more than three years.
Citizens Bank International Ltd has offered the highest interest of 9.15 percent on individual fixed deposits this month. The bank had offered 9.35 percent interest on individual fixed deposits in the previous month.
Nepal Investment Mega Bank Ltd is offering 8.6 percent interest on individual fixed deposits of more than three years. Nepal SBI is offering 8.25 percent interest on individual fixed deposits, while both Himalayan Bank Ltd and Sanima Bank Ltd are offering 8.15 percent.
Prime Commercial Bank, Siddhartha Bank Ltd, Global IME Bank, and Nabil Bank Ltd are all offering 8.1 percent interest on individual fixed deposits.
Rastriya Banijya Bank Ltd (RBBL) and Standard Chartered Bank Nepal Ltd are offering 8.07 percent interest on individual fixed deposits for the month of Magh. RBBL is offering 8.07 percent interest rates on deposits parked for a minimum of two years, while Standard Chartered is offering the interest on deposits pledged for more than five years.
Prabhu Bank Ltd and NIC Asia are both offering an interest rate of 8.065 percent on individual fixed deposits. Likewise, Machhapuchhre Bank Ltd, Laxmi Sunrise Bank Ltd, and Nepal Bank are all offering eight percent interest on individual fixed deposits.
