Banker’s Association revokes agreement for 11% interest rates on fixed deposits; Banks free to determine interest rates on their own

The agreement made between the banks regarding the interest rates of the deposits have been revoked. Nepal Bankers Association had made an agreement with the 28 commercial banks for maintaining the interest rate of not more than 11% on fixed deposits.

However, even after the agreement few banks had started collecting deposits providing interest rates at more than the agreed rate. So, the association had called up a meeting including the Chief Executives of all the 28 banks and the representatives of the association on Sunday.

After the meeting, the association has revoked the “Gentleman’s agreement”. The banks can now determine the interest rates on their own.

Immediately after the agreement for 11% interest rate was revoked, NIC Asia Bank has launched a new scheme with 12% interest rate on the fixed deposits. After facing allegations of running a “Cartel” the Banker’s Association has set the commercial banks free to determine the interest rates.

People have assumed that the institutional deposits will increase to 13% which may also rise to 14 % in case of lack of fund in the market.