Commercial Banks Can Only Provide Upto 10.05% on Fixed Deposits, Rates of Finance Companies and Development Banks Also Capped Slightly Higher

Banks and financial institutions have unveiled their interest rates for the month of Mangsir.

While the banking economy is struggling to attract enough deposits for loan forwarding, Nepal Rastra Bank has further tightened the interest rate raising provisions. Previously, banks could only raise their previous interest rates by 10%. Modifying the rule, NRB issued a directive that a bank will be allowed to increase the interest rate by only 10 percent of the average interest rate of all the commercial banks. The same rule applies to development banks and finance companies, according to their own sector.

Pertaining to the directive, it seems that most commercial banks have raised their rates to the maximum allowed interest rate of 10.05% on fixed deposits.

In Kartik, the interest yield on fixed deposits of most commercial banks stood at 9.36%, with some banks only paying 8%. The average interest rate on fixed deposits published by banks last month was 9.13. Thus, when the average interest rate is increased by 10 percent, it becomes 10.05%, hence the new rate unveiled by most banks today.

Mega Bank has 9.96% as its highest interest rate and Standard Chartered Bank has 9.5%. Rastriya Banijya Bank, which is fully government-owned, has a maximum interest rate of 9.11%.

Intriguingly, Nepal Credit & Commerce Bank Limited (NCCB) will provide 8.75% on ordinary savings scheme, under the heading "NCC Silver Saving Account."

Meanwhile, most development banks have kept 10.25% as the maximum interest rate on fixed deposits (individuals) for the month of Mangsir. However, Narayani Development Bank has claimed to provide a maximum of 10.3% interest rate on FDs and Sindhu Bikas Bank has claimed of providing 10.38%.

In contrast, the interest rate on fixed deposits given by finance companies is capped at 10.35%.