Interest rate reduction halted; 18 banks maintain stable rates in Falgun

KATHMANDU: The trend of reducing interest rates has been halted in the past month. According to the list published by commercial banks for the month of Falgun , the interest rates of 18 banks have remained stable. While Global IME Bank increased its interest rate, Laxmi Sunrise Bank reduced its rate.

Previously, in the month of Magh , the interest rates of 18 banks were also stable. In Poush , 14 banks maintained stable rates, while in Mangsir , 8 banks kept their rates unchanged while 11 banks reduced them. The continuous decline in interest rates over previous months has now stopped for the last two months.

Overall, the average interest rate for personal fixed deposits has remained the same for both Magh and Falgun . For the month of Falgun, banks are offering a maximum average interest rate of 6.0% on personal fixed deposits, which is unchanged from Magh.

Higher Rates for Longer Terms, Lower Rates for Shorter Terms

For personal fixed deposits, higher interest rates are offered for terms exceeding 5 years , while shorter-term deposits carry lower rates. For Falgun, the highest interest rate for personal fixed deposits is 6.6% , offered by NMB Bank and NIC Asia Bank , applicable for longer durations.

The Rastriya Bank has implemented a policy ensuring that the difference between the upper limit of interest rates for personal fixed deposits and the minimum interest rate for savings accounts does not exceed 5% .

Institutional Fixed Deposits and Remittance Accounts

For institutional fixed deposits, banks must offer interest rates at least 1 percentage point lower than those for personal fixed deposits. Conversely, for personal remittance accounts, banks can offer up to 1 percentage point higher interest rates.

Reasons for Stability in Interest Rates

Due to sustained high liquidity in the banking system, banks have maintained stable interest rates. It is estimated that interest rates will likely remain stable for the next few months. However, the total loan disbursement by banks has started to increase recently, which is why banks have halted further reductions in interest rates.

According to data from the Nepal Rastra Bank (NRB) , during the current fiscal year (from Shrawan to Poush), a total of NPR 265.56 billion has been disbursed as loans.

Maximum Interest Rates for Personal Fixed Deposits in Falgun
Below are the maximum interest rates set by various banks for personal fixed deposits in Falgun:

Bank Name                                                 Percentage

Agriculture Development Bank         5.51%
Rastriya Banijya Bank                           6.00%
Nepal SBI Bank                                        5.50%
Laxmi Sunrise Bank                               5.50%
Global IME Bank                                     6.00%
Kumari Bank                                            5.91%
Prime Commercial Bank                     6.25%
Nepal Bank Bank                                    5.60%
Sanima Bank                                            6.05%
Citizens Bank                                           5.65%
Nabil Bank                                                5.75%
Nepal Investment Mega Bank           6.50%
Siddhartha Bank                                    6.00%
Standard Chartered Bank                  6.25%
Machhapuchchhre Bank                    6.00%
Prabhu Bank                                           6.10%
NMB Bank                                                6.60%
NIC Asia Bank                                         6.60%
Himalayan Bank                                    6.25%
Everest Bank                                           6.00%