BFIs adjust interest rate for Chaitra

KATHMANDU: Banks and financial institutions have publicly disclosed reduced interest rates for the month of Chaitra (Mid March-mid Apr). Most commercial banks have adjusted their interest rates accordingly. Despite having investable funds of nearly NPR 615 billion in the banking system, the flow of loans remains low, prompting banks to gradually decrease deposit interest rates.

In the absence of increased demand in the banking system, the flow of loans is unlikely to rise. Banks are experiencing a surplus in profit, while non-banking assets are on the rise.

Banks have been regularly publishing information on auction notices in newspapers. Rather than increasing costs by raising deposits at high-interest rates, banks are inclined to decrease interest rates on deposits.

According to recent disclosures by banks, both ordinary and fixed deposit interest rates have been reduced. As per the monetary review conducted by the central bank in the second quarter, the interest rate for institutional fixed deposits has been fixed by banks.

The interest rate on institutional fixed deposits for more extended terms was maintained at 7.5 percent in comparison to the 1 percent reduction during the month of Falgun (Mid Feb-mid March). This represents an increase in interest rates compared to previous month.

Nepal Bank Limited has also reduced interest rates for Chaitra. The bank has decided to set interest rates ranging from 3.40 percent to 5.40 percent for ordinary savings accounts. For a one-year fixed deposit, the bank has set an interest rate of 6 percent, which increases to 7.5 percent for deposits exceeding one year. Following the provision of the central bank, the interest rate on institutional fixed deposits for an extended period is set at 5 percent.

Similar to Nepal Bank Limited, Laxmi Bank has also lowered interest rates. The bank has declared interest rates ranging from 3.50 percent to 6.50 percent for ordinary savings accounts. For a one-year fixed deposit, the bank has reduced the interest rate to 7.25 percent from 7.75 percent.

Similarly, Prabhu Bank has adjusted its interest rates for Chait. The bank is providing interest rates between 3 percent and 6 percent for ordinary savings accounts. The fixed deposit interest rate for one year is set at 6.50 percent, and for fixed deposits exceeding one year, it is set at 7.50 percent.

Kumari Bank has also reduced interest rates on deposits. The bank is offering interest rates from 3.76 percent to 5.76 percent for ordinary savings accounts and 6.51 percent for fixed deposits for up to three months. For fixed deposits exceeding one year, the interest rate is set at 7.51 percent.

Agricultural Development Bank has adjusted deposit interest rates as well. The bank is offering interest rates ranging from 4.2551 percent to 5.661 percent for ordinary savings accounts. For institutional fixed deposits, the bank has set interest rates from 4.01 percent to 4.51 percent for fixed deposits of up to three months, 6.51 percent for fixed deposits exceeding one year, and 7.51 percent for institutional fixed deposits.

Nabil Bank has also joined in reducing interest rates. The bank is offering interest rates between 3.75 percent and 6.75 percent for ordinary savings accounts. The fixed deposit interest rate for up to three months is set at 6.10 percent, and for fixed deposits exceeding one year, it is set at 7.51 percent.

Likewise, Siddhartha Bank has announced interest rates from 3 percent to 6 percent for ordinary savings accounts and a fixed deposit interest rate of 7.25 percent for one year and 7.50 percent for fixed deposits exceeding one year.

Citizens Bank has adjusted interest rates as well, offering rates ranging from 3.75 percent to 6.75 percent for ordinary savings accounts. The fixed deposit interest rate is set at 7.50 percent for up to three months and 7.75 percent for fixed deposits exceeding one year.

As per the new provision of the central bank, NIC Asia Bank has increased interest rates for Chait. The bank is providing an interest rate of 8.548 percent for institutional fixed deposits for an extended period, marking an increase compared to Falgun.

These adjustments in interest rates by various banks are reflective of the evolving economic landscape and aim to strike a balance between depositors’ interests and the banks’ profitability.