KATHMANDU, NOVEMBER 15
Commercial banks have decided not to increase interest rates for deposits from mid-November to mid-December.
A meeting of the members of Nepal Bankers' Association (NBA) held today morning decided not to increase the deposit interest rate in the upcoming month. This means commercial banks will provide maximum interest rate of 12.133 per cent on personal savings deposits for the coming month. Similarly, the maximum interest rate for institutional saving deposits has been maintained at 10.133 per cent, 7.133 per cent for general savings deposits, and 9.13 per cent for deposits on remittance savings.
Earlier, the Nepal Rastra Bank (NRB) had directed banks to publicise the interest rates before the beginning of each month according to the Nepali calendar if the rates are to be changed.
The interest rate set for mid-October has been maintained by the banks for the upcoming month as well, according to Anil Sharma, executive director of the NBA. However, there is still a chance of fluctuation in lending rates.
"As lending rates are tied to the base rate of the bank, there is a chance of lending rates rising or falling following a change in the bank's base rate. In such a case, increased borrowing rates will be applied for new customers only," Sharma told The Himalayan Times.
Sharma also emphasised that the increase in interest rates in the domestic market is a result of economic turmoil faced around the world at present. "Interest rates and inflation are increasing in advanced economies at the moment affecting the global trend. The US Federal Reserve has also been aggressively hiking interest rates leading to a stronger US dollar and adversely affecting countries around the world. The fluctuation of interest rates and inflation at such a time is bound to happen and we cannot avoid it. Borrowing rates have been relatively higher in the past and are currently at their pre-COV- ID-19 levels. People are being misinformed that banks are excessively increasing the lending rates and that is not true," he said.
According to Sharma, the stability in interest rates is just as important for banks as it is for their customers.
"Our deposit rates must be higher than the inflation rate or else it would not be possible to attract any deposit. The mindset that interest rates will not decrease after it is hiked should be changed and it is normal for interest rates to fluctuate in a macroeconomy."
A version of this article appears in the print on November 16, 2022 of The Himalayan Times.
