Continuous decrease in interest rates due to excess investable funds in banking system

KATHMANDU: Due to excess investable funds in the banking system, interest rates have been steadily decreasing since Falgun of the previous fiscal year. The demand for loans has not matched the accumulation of deposits, leading to a 28-month low in loan interest rates.

For the first month of the upcoming fiscal year, Shrawan, banks have further reduced deposit interest rates, which is expected to lead to an additional decrease in loan interest rates.

For Shrawan, Rastriya Banijya Bank has reduced the maximum interest rate on personal fixed deposits to 6.21 percent, a 0.01 percent decrease compared to Ashar. Global IME Bank has decreased the interest rate on personal fixed deposits by 0.25 percent, setting it at 6.25 percent for Shrawan.

Nepal Bank Limited has reduced its interest rate by 0.5 percent compared to Ashar, setting it at 6.25 percent. Prime Commercial Bank has reduced the interest rate on personal fixed deposits by 0.25 percent, setting it at 6.5 percent.

Other banks have also reduced their maximum interest rates on personal fixed deposits compared to Ashar, including: Kumari Bank: 6.71 percent, Sanima Bank: 6.4 percent, Citizens Bank: 6.75 percent, Siddhartha Bank: 6.75 percent, Prabhu Bank: 7 percent, Machhapuchchhre Bank: 7 percent, NMB Bank: 7.53 percent, NIC Asia Bank: 7.53 percent, Himalayan Bank: 7.5 percent.

In contrast, Agriculture Development Bank and Everest Bank have increased their interest rates for Shrawan. Nabil Bank, Nepal SBI, Laxmi Sunrise, Standard Chartered Bank, and Nepal Investment Mega Bank have maintained the same interest rates as in Ashar.

The continuous reduction in interest rates highlights the banking sector’s response to the surplus investable funds and the lower demand for loans. As banks adjust their rates, borrowers can expect more favorable loan conditions in the coming months.