Commercial Banks introduce new interest rates: Rates slashed amidst excess liquidity

Numerous banks have introduced new interest rates effective from Shrawan 1, 2077.

The Bankers' Association had been agreeing on interest rates on deposits for the past two years. However, the gentleman's agreement to set fixed interest rates for ordinary financial products was broken after the banks said that it was difficult to meet costs because of excess liquidity in the banking system.

In order to survive this excess liquidity that has been eating up profit as interest payment expenses, banks have started to reduce their interest rates in savings and fixed deposits.

NABIL Bank and Rastriya Banijaya Bank had updated their interest rates structure a day after the Bankers' Association left the responsibility of setting interest rates to the banks from Shrawan 1st onwards.

And the other commercial banks immediately followed suit. As of writing this article, 13 other banks have also issued formal notices with their updated interest rate structure.

Here is a quick summary of the interest rates you'll get on deposits:

Based on the information collected by Sharesansar, Excel Development Bank Limited has its interest rate for savings in the range of 2% to 4% for saving accounts. Sanima Bank, Prabhu Bank, Nepal Investment Bank, and Global IME Bank have adjustable savings interest rates in the range from 3% to 5% p.a.

Similarly, Himalayan Bank's interest rate for deposits varies from 3.5% to 5% p.a.

NCC Bank have a 5% interest rate for most of their deposit products. Mahalaxmi Bikas Bank and Garima Bank's rate varies from 5 to 6% and Jyoti Bank's rates fall in the range of 5.75% to 6% p.a.

Meanwhile, Machhapuchhre Bank and Nepal SBI Bank haven't changed their interest rates for ordinary deposits although the latter has updated its rate for fixed deposits.

Interest Rates for fixed deposits have changed as well

Himalayan Bank's interest rates for fixed deposits vary from 6% to 8.25%. Similarly, Prabhu Bank has this rate adjusted from 6.5% to 7.25% while Nepal SBI Bank from 6.5% to 6.75%. This rate is higher for longer fixed deposits and vice versa.

Meanwhile, NCC Bank and NIBL have maintained a fixed 7.25% rate while Mahalaxmi Bank, Jyoti Bikas Bank, and Garima Bank have a fixed 9%. Global IME Bank's rate for fixed deposit is maintained at 7.75%.

All of the interest rates for fixed deposits mentioned above were for individuals.

If we analyze the institutional interest rate for fixed deposits among all the 13 banks above, it varies from a minimum of 6% to a maximum of 8%.