32 May, Kathmandu. Commercial banks have further reduced the deposit interest rates for the coming June. Out of 20 operating banks, three banks have increased the deposit interest rate while 11 have decreased it. Banks have reduced interest rates on personal term deposits by an average of 0.12 percentage points.
Due to excess liquidity, when the National Bank has to continuously draw liquidity, banks have moved the deposit ‘product’ forward accordingly, targeting long-term term deposits to reduce the funds.
Banks seem to have a policy of slightly higher interest rates on long-term personal term deposits and lower interest rates on short-term term deposits. When the cost of funds decreases, the base rate decreases and the interest rate of the loan decreases, giving relief to borrowers.
In the same way, the cost of liquidity, which banks are unable to invest, will also decrease. A banker said that due to the situation where the demand for credit does not increase immediately and the pressure on the capital of many banks, the interest rate has been reduced due to the lack of ‘aggressive’ credit expansion.
The National Bank has arranged that the difference between the upper limit of individual term deposits and the minimum interest rate of savings should not be more than 5 percent.
Similarly, only 50 percent of the minimum interest rate of savings can be given on call deposits. Interest rate should be reduced by at least 1 percentage point in institutional term deposits than individual term deposits.
Banks can reduce interest rates on savings and call deposits only after reducing the maximum interest rate on individual term deposits.
The National Bank has asked the banks to reduce the fluctuations in the interest rate, as a basis for determining the interest rate, the banks of the same category can take the average of the maximum interest rate of the previous month and lower it by only 10 percent.
“While determining and publishing the interest rate offered by banks and financial institutions on deposits, all institutions of the related category may determine the interest rate by changing the average of the maximum interest rate published in the previous month and the average of the minimum interest rate (except for call deposits) by a maximum of 10 percent,” the National Bank issued. It is in the interest rate related provisions of the Integrated Directive.
In this way, if the difference between the maximum and minimum interest rates maintained while determining the interest rate exceeds the limit set by the directive, there is a provision that one of the maximum or minimum rates should be maintained and the other rates adjusted.
Within the same limits, commercial banks have published interest rates for January. In Asar, Krishi Bikas, Nepal Bank, Nepal Investment Mega, Siddharth, Standard Chartered and Prabhu Bank have continued to maintain the same interest rate as the upper limit of individual term deposits.
The lowest interest rate on personal term deposits in June is 5.6661 percent of Krishi Bikas Bank and 5.75 percent of Everest Bank. While Krishi Bikas offers the same interest rate for term deposits of one to five years, Everest offers the same interest rate for deposits of more than two years.
Himalayan Bank, on the other hand, has increased the interest rate of individual fixed deposits to 8.25 percent in June from 7.5 percent in May. The bank is going to give this interest rate on personal term deposits of five to 10 years.
Similarly, Nabil Bank has increased the interest rate from 6.75 percent to 7 percent. He has fixed the interest rate for individual term deposits above five years.
Machhapuchchhe Bank is going to give 7.5 percent interest rate on personal fixed deposits for a period of more than three years. The bank has increased the interest rate which was a maximum of 5.26 percent in May.
National Commercial Bank, Nepal SBI, Laxmi Sunrise, Global IME, Kumari, Prime, Sanima, Citizens, NMB and NIC Asia Bank have reduced interest rates.
