Banks decide not to raise interest rate on loans for the month of Shrawan

KATHMANDU: The Nepal Bankers Association (NBA), umbrella organization representing commercial banks of Nepal, has decided not to raise interest rates for mid-July to mid-August period. Commercial banks have agreed to offer interest rates up to 11.03 per cent on deposits for this period.

Machhapuchhre Bank’s Chief Executive Officer (CEO) Santosh Koirala said that in a meeting of the Bankers’ Association on Wednesday, it was decided to continue with the interest rate fixed for June.

NRB Governor Maha Prasad Adhikari has been saying that interest rates may continue to rise. Although the governor’s official said that the interest rate can be increased through a public forum, but the Bankers Association has decided to keep it constant.

Banks have to announce new interest rates on deposits every month. In the past few months, banks have been raising interest rates on deposits due to paucity of investable funds.

The Integrated Directive of Nepal Rastra Bank provides for 1 percent lower interest rate on fixed deposits of institutional nature as compared to individual deposits in Nepalese currency. Similarly, only 50 per cent of the minimum interest rate can be paid on savings on call deposits.

Commercial banks have published interest rates of 11.03 per cent on fixed deposits of individual nature and 10.03 per cent on fixed deposits of institutional nature. The NRB has stipulated that the difference between the higher interest rate of fixed deposits and the lower interest rate of savings should not exceed 5 per cent.