Banks impose new interest rates after agreement with NBA; savings and fixed deposit rates fall

Almost all the commercial banks have published notice regarding new interest rate effective from Ashoj 26, 2075 (12 October, 2018). This comes after the Nepal Bankers’ Association (NBA) established new interest rate on savings account and fixed deposit account.

The association, among the presence of senior executives of all the commercial banks, decided the new interest rate. It was established that no commercial bank will offer interest rate on savings account less than 5% p.a and more than 7% p.a. It was also decided that the interest rate for individual fixed deposit will not be more than 10% p.a. and that of institutional fixed deposit will not be more than 9% p.a. With this, the Bankers’ Association aims to establish a uniform rate of interest offered by commercial banks to its customers.

Previously, it was decided by the association that interest for savings account will not be more than 7% p.a. and that of fixed deposit will not be more than 10.5% p.a. But the association received complaints regarding banks not following the pegged rates due to which new interest rates were established.

After the associations’ decision to reduce the interest rates, inflow of investment in the stock market can be expected although, the expected effect may be delayed due to festival of Dashain where people prefer to hold liquid purchasing power rather than investing it or depositing it in a bank.