KATHMANDU: The bank interest rate, which is on fall since last few months, is likely to come down further with excessive liquidity in the country’s financial system.
As the base rate of majority of commercial banks declined by about one percentage point in mid-October compared to mid-July, the interest rate of loan is expected to decline in the same proportion.
The interest rate on loans should be reduced according to the change in the base rate of banks, as per provision of the central bank.
According to the NRB’s directive, banks and financial institutions should adjust the interest rate on loans (new and old) every three months as per the change in the base rate. As the result, banks need to reduce interest rates further to comply with the NRB directive.
As per the first quarter financial statements published by banks, the average base rate of commercial banks is 7.79 percent which is 0.71 percent lower compared to the base rate of last mid-July. The the average base rate of banks was 8.5 percent in last mid-July.