Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal’s banking sector has recorded a significant decline in lending costs over the past year, with the average base rate of banks falling by 20.63 percent, equivalent to a 1.38 percentage point drop, leading to a proportional reduction in loan interest rates across the system.
According to the latest published banking statistics, the average base rate of commercial banks stood at 5.33 percent in Poush of the current fiscal year 2082/83, down from 6.71 percent in the corresponding period last year. Bankers attribute the fall primarily to a sustained decline in deposit interest rates, which has directly reduced funding costs and pulled down base rates.
Global IME Bank Posts Steepest Drop
Among commercial banks, Global IME Bank recorded the largest decline in base rate, with a 25.75 percent reduction, bringing its base rate down to 5.16 percent from 6.95 percent a year earlier. With the base rate serving as the benchmark for pricing loans, the decline has automatically lowered the bank’s lending rates.
Rastriya Banijya Bank Offers Lowest Base Rate
As of the end of Poush, Rastriya Banijya Bank (RBB) maintained the lowest base rate in the banking system at 4.36 percent, after a 19.85 percent drop from 5.44 percent last year. The lower base rate means comparatively cheaper borrowing costs for RBB customers.
Broad-Based Decline Across Banks
Other major banks have also reported notable reductions:
Prabhu Bank: down 24.07% to 5.36%
Agricultural Development Bank: down 23.93% to 5.02%
Laxmi Sunrise Bank: down 23.70% to 5.47%
Machhapuchchhre Bank: down 23.24% to 5.48%
Citizens Bank: down 23.01% to 5.62%
Similarly:
Sanima Bank: down 22.68% to 5.25%
Himalayan Bank: down 22.46% to 5.66%
Kumari Bank: down 21.56% to 5.60%
NMB Bank: down 20.80% to 5.48%
Nepal SBI Bank: down 20.44% to 5.68%
Nabil Bank: down 20.12% to 5.04%
Further:
Nepal Investment Mega Bank (NIMB): down 19.75% to 5.16%
Prime Bank: down 19.66% to 5.72%
Nepal Bank: down 19.48% to 4.96%
Siddhartha Bank: down 19.19% to 5.60%
Everest Bank: down 16.43% to 4.73%
Meanwhile:
NIC Asia Bank: down 14.76% to 6.41%
Standard Chartered Bank Nepal: down 7.21% to 4.76%
Cheaper Loans, But Weak Credit Demand
Although falling base rates have made loans more affordable, bankers say credit demand has not risen as expected. Weak investment appetite, subdued consumer demand, and low confidence in the private sector are limiting the economy’s ability to fully utilize cheaper borrowing.
Financial sector experts note that while monetary conditions have eased, structural issues — including slow project execution, cautious business expansion, and fragile market sentiment — are preventing a strong credit rebound.
The data indicate a clear easing cycle in Nepal’s banking system, but translating lower lending rates into higher economic activity remains a key challenge for both banks and policymakers.
Bank Base Rate Comparison
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