Banks and Financial Institutions Raise Interest Rates for Falgun

Banks and Financial Institutions have unveiled the interest rates profile for the month of Falgun.

Nepal Rastra Bank had previously taken measures to limit a sudden hike in interest rate. The central bank believed this would minimize the impact on borrowers and businesses that would otherwise be hurt by the rise in interest payment expenses.

However, the liquidity scenario worsened despite the central bank's measures. The national banking economy had very little liquidity, which strangled credit flow. As such, the central bank has now instructed banks to raise the interest rates in order to attract more deposits and ease up the liquidity crisis.

Commercial Banks have raised their highest interest offering on deposits by one percentage point.

Interest Rates Profile in Previous Months

Commercial banks had kept their interest rate profile unchanged in Magh. The maximum interest rate on fixed deposits provided by commercial banks was 10.05%, with Standard Chartered Bank as an exception. SCB had only offered 9.5% as its maximum interest rate on fixed deposits.

In contrast, institutions were offered a maximum of 9.05% on fixed deposits.

Banks had maintained a maximum rate of 10.05% already in the month of Mangsir and Poush.

Meanwhile, development banks had kept 10.35% as the maximum interest rate on fixed deposits (individuals) for the month of Magh. In the month of Poush, the maximum rate was 10.25%. In the month of Magh, institutions were offered not more than 9.35% p.a. In the month of Poush, the maximum rate was 9.25% for institutions.

In contrast, the interest rate on fixed deposits given by finance companies in Magh was capped at 10.65% for individuals. In the month of Magh, institutions were offered not more than 9.65% p.a. In the month of Poush, the maximum rate was 10.35% for individuals and 9.35% for institutions.

Interest Rates Profile Now (Falgun)

Commercial Banks have raised their interest rates profile for the month of Falgun.

Most commercial banks provide a 6.03% interest rate p.a. for depositors on savings. Meanwhile, individuals will get a maximum interest payment of 11.03% p.a. on fixed deposits.

On the other hand, institutions will get a 10.03% interest payment p.a. on fixed deposits.

Development Banks have also raised the interest rates on deposits. Regional level development banks have increased the interest rates on fixed deposits to 11.65% and national level development banks to 11.55%. This is the rate for individual depositors. The rate for institutional depositors is less by one percentage point. Nonetheless, Sindhu Bikas Bank provides 11.81% on fixed deposits for individuals and 10.81% for institutions.

Finance Companies have also raised the interest rates on deposits. The highest interest rate for individuals on fixed deposits is 11.71%. This rate is 10.71% for institutional depositors.