Commercial banks have once again lowered deposit rates for the month of Kartik (mid-October to mid-November) amid rising liquidity and sluggish credit demand because of slowdown in economic activities.
According to the interest rate data published by the banks, 15 out of 20 commercial banks have reduced deposit rates for Kartik, while five have kept them unchanged. The average maximum interest rate on individual fixed deposits has dropped to 5.1 percent down from 5.37 percent in Ashoj (mid-September to mid-October) — a decline of 0.27 percentage points.
The reduction marks the latest in a year-long trend of declining deposit rates. Banks are struggling to expand credit as economic activity remains subdued across sectors such as real estate, construction and trade.
Several banks are also accumulating non-banking assets as a result of loan defaults, further signaling stress in the banking system.
Among major banks, Agricultural Development Bank, Himalayan Bank, Prabhu Bank, and Nabil Bank have now lowered their maximum fixed deposit rate to below 5 percent. In contrast, Global IME Bank continues to offer the highest rate at 6 percent, unchanged from the previous month.
The steepest cuts have come from NMB Bank and Machhapuchhre Bank, both of which have reduced their maximum fixed deposit rate by one percentage point, from 6 percent in the previous month to 5 percent for the current month.
Banks have been fixing interest rates on their own since mid-July 2023/24 after the Nepal Bankers’ Association ended its gentlemen’s agreement on uniform interest rates citing improving liquidity in the banking system.
Banks are permitted to adjust their interest rates on a monthly basis. According to the Nepal Rastra Bank (NRB), they must publish the applicable rates on the last day of each month. They can lower and raise the rates by a maximum of 10 percent at a time.
Bankers say the rate cuts reflect an attempt to balance liquidity management with declining lending opportunities. Unless private sector borrowing picks up and the economy shows signs of recovery, deposit rates are expected to remain under pressure in the coming months, they added.
|
Bank Name |
Kartik (%) |
Ashoj (%) |
Change |
|
Siddhartha Bank |
5.5 |
5.5 |
0 |
|
Global IME Bank |
6 |
6 |
0 |
|
Nepal Bank |
5.25 |
5.25 |
0 |
|
Kumari Bank |
5.01 |
5.01 |
0 |
|
Rastriya Banijya Bank |
5.5 |
5.5 |
0 |
|
Sanima Bank |
5.15 |
5.25 |
-0.01 |
|
Agricultural Development Bank |
4.95 |
5.05 |
-0.1 |
|
Standard Chartered Bank |
5 |
5.18 |
-0.18 |
|
Nepal SBI Bank |
5 |
518 |
-0.18 |
|
Himalayan Bank |
4 |
4.25 |
-0.25 |
|
Citizens Bank |
5 |
5.25 |
-0.25 |
|
Nepal Investment Mega Bank |
5 |
5.25 |
-0.25 |
|
Laxmi Sunrise Bank |
5 |
5.25 |
-0.25 |
|
NIC Asia Bank |
5.75 |
6 |
-0.25 |
|
Everest Bank |
5 |
5.25 |
-0.25 |
|
Prabhu Bank |
4.95 |
5.35 |
-0.4 |
|
Prime Commercial Bank |
5 |
5.5 |
0.5 |
|
Nabil Bank |
4.95 |
5.5 |
-0.55 |
|
NMB Bank |
5 |
6 |
-1 |
|
Machhapuchhre Bank |
5 |
6 |
-1 |
|
Average |
5.1 |
5.37 |
-0.27 |
