Despite interest rate slashing war, Century Commercial Bank gives higher interest rates on fixed deposits

Because of an increase in deposits and a decrease in borrowing, the financial institutions of Nepal are sitting idle with a lot of excess liquidity. The Covid-19 pandemic has affected businesses in all sectors of the national economy.

Thus, to decrease the expenses incurred while paying interest on savings, banks are slashing interest rates one after another. As Nabil Bank CEO Anil Shah eloquently puts it - Banks' focus at uncertain times like this is first survival, revival, and then only, sustained growth.

However, Century Commercial Bank Limited (CCBL) seems to be challenging the status quo with its unusual interest rates profile.

For individual depositors, CCBL has been providing interest rates in the range of 8.25% to 8.5% for fixed deposits.

Other banks are providing far lower than that. For instance, the highest interest that Rastriya Banijya Bank can pay an individual for fixed deposits is 6.5%. NIC Asia Bank Limited can give 7.75%, max. Even the industry giant Nabil Bank itself can only give 8.25% for individual fixed deposits.

Now, for an outsider, this difference may seem negligible. But banks and financial institutions are in a constant state of interest rates war with each other, and even a one-up of 0.5% can get more customers and deposits.

Unfortunately, the Unified Directive for Bank and Financial Institutions published by NRB now allows BFIs to only update interest rates for deposits on a monthly basis. As of now, banks were free to update their interest rates profile frequently depending on the excess or crisis of liquidity in the economy.

Thus, given that CCBL's last update was on 16th Bhadra, it will be interesting to see whether it brings the rates down next month.