Commercial banks announce new fixed deposit interest rates for October

KATHMANDU: Commercial banks in Nepal have announced the new fixed deposit interest rates for the month of October, with most banks reducing their rates while a few have decided to maintain the previous month’s rates. The interest rate cuts come after Nepal Rastra Bank, through the monetary policy for the current fiscal year, reduced the policy rate from 5.5 percent to 5 percent, providing banks with the psychological basis for lowering deposit rates.

Since November of the previous fiscal year, banks have been consistently reducing fixed deposit interest rates, citing a slowdown in loan disbursement compared to deposit collection. As a result of these reductions, loan interest rates have dropped to single digits.

Rate Changes for October

Everest Bank has decreased its fixed deposit interest rates, lowering the rate for deposits ranging from three months to two years from 4.5 percent to 4.15 percent. For deposits of two to five years, the rate has been reduced from 5 percent to 4.75 percent, and for deposits exceeding five years, the rate has been cut from 6.10 percent to 6 percent.

Similarly, Nabil Bank has reduced the interest rate for deposits of three months to one year from 5.5 percent to 5 percent, and for deposits of one to two years from 5.5 percent to 5.25 percent. For deposits between two to five years, the rate has been lowered from 6.5 percent to 6.25 percent, while the rate for deposits over five years has been reduced from 7 percent to 6.75 percent.

Global IME Bank, however, has maintained its fixed deposit interest rates from September. The bank will continue offering 4 percent for deposits up to three months, 5 percent for deposits between six months and one year, and 5.5 percent for deposits between one to two years.

Other Banks Follow Suit

Siddhartha Bank has also decided to keep its September interest rates unchanged for October. The bank is offering 5 percent for deposits between three months and one year, 5.75 percent for deposits between one to two years, and 6.5 percent for deposits exceeding two years.

Kumari Bank has reduced the interest rates across all types of fixed deposits. The rate for deposits between three to six months has been lowered from 5.3 percent to 4.31 percent, and for deposits between six months to one year, it has been cut from 5.81 percent to 4.81 percent. The interest rate for deposits between one to two years has been reduced from 6.3 percent to 5.81 percent, and for deposits of more than two years, the rate has been cut from 6.51 percent to 5.31 percent.

Sanima Bank has also reduced its interest rates for October. The interest rate for deposits between three to six months has been lowered from 4.95 percent to 4.5 percent, for deposits between six months to one year from 5.7 percent to 5.4 percent, and for deposits over one year from 6.2 percent to 5.9 percent.

Prabhu Bank has opted to continue with its September interest rates for October, offering 5.1 percent for deposits between six months to one year, 5.6 percent for deposits between one to five years, and 6.1 percent for deposits over five years.

NIC Asia Bank has also reduced its fixed deposit rates. The rate for deposits of three months has been cut from 5.25 percent to 5 percent, and for deposits between three months to less than one year, it has been reduced from 5.5 percent to 5.05 percent. The interest rate for one-year deposits has been lowered from 6 percent to 5.6 percent.

Nepal Bank Limited has also reduced its interest rates for October, with the rate for deposits up to two years reduced from 5.25 percent to 4.55 percent. The bank will offer 5.25 percent for deposits exceeding two years and 5.95 percent for deposits over five years.

Machhapuchhre Bank has decided to continue with the interest rates from September for the month of October.

Impact on Loans

With the consistent reduction in deposit interest rates, banks have also lowered their loan interest rates, bringing them to single digits. Banks that have reduced fixed deposit interest rates in October are expected to lower their loan interest rates further in November, while banks that maintained September’s rates will likely see stable loan interest rates.

The new rates reflect the overall banking sector’s adjustment to the Nepal Rastra Bank’s policy direction, aimed at promoting lower borrowing costs and stimulating economic growth.