Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Commercial banks have reduced fixed deposit interest rates for the month of Magh, reflecting improved liquidity conditions in the banking system and a continued easing trend in deposit pricing.
According to updated rate disclosures, 20 commercial banks have fixed the maximum average interest rate on individual fixed deposits at 4.6845 percent for Magh. This is down by 0.1495 percentage points compared to Poush. Out of the 20 banks, 11 have lowered interest rates on individual fixed deposits for the current month.
Himalayan Bank and Machhapuchchhre Bank have made the steepest cuts, reducing their rates by 0.5 percentage points each. Other banks that have lowered rates include Siddhartha Bank, Sanima Bank, Laxmi Sunrise Bank, Citizens Bank, Kumari Bank, Everest Bank, Agricultural Development Bank, Nepal SBI Bank, and Standard Chartered Bank Nepal.
In contrast, Prime Commercial Bank, which offered the lowest interest rate in Poush, has increased its fixed deposit rate for Magh by 0.15 percentage points to 4.4 percent.
Institutional deposit rates also decline
Institutional fixed deposit rates have also edged down during the review period. The average institutional deposit rate has decreased by 0.0625 percentage points. For Magh, four commercial banks have reduced institutional deposit rates, while the remaining 16 banks have kept their rates unchanged from Poush.
Bank-wise fixed deposit rates for Magh
Under the revised structure, Global IME Bank is offering the highest fixed deposit interest rate at 5.5 percent. Nepal Bank has set its rate at 5.1 percent, while Rastriya Banijya Bank, NIC Asia Bank, Nepal Investment Mega Bank, and NMB Bank are offering an equal rate of 5 percent.
Siddhartha Bank, Sanima Bank, Prabhu Bank, and Nabil Bank have fixed their rates at 4.55 percent. Laxmi Sunrise Bank, Machhapuchchhre Bank, and Citizens Bank are offering 4.5 percent. Kumari Bank has set its rate at 4.43 percent, while Everest Bank, Agricultural Development Bank, and Nepal SBI Bank are offering 4.4 percent each.
Standard Chartered Bank Nepal has set the lowest fixed deposit interest rate for Magh at 4.36 percent.
Continued easing cycle
Bankers attribute the continued reduction in deposit rates to excess liquidity in the financial system, lower credit demand, and easing interbank rates. With liquidity conditions remaining comfortable and loan growth subdued, banks are expected to maintain a cautious stance on deposit pricing in the near term.
The decline in fixed deposit rates is likely to reduce interest income for depositors but could help lower banks’ cost of funds, potentially creating space for further adjustments in lending rates in the coming months.
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