The Base Rate of Banks Have Increased in Recent Month; Check Out the Current Base Rates of 26 Commercial Banks of Nepal

The base rate of the banks has raised as of Bhadra's end, 2079 BS. The increase in base rate has also caused the interest rates on bank loans and advances to rise.

Base Rate (BR), as the name suggests, is the basic or the minimum rate of lending as per the guidelines of the Nepal Rastra Bank. No commercial bank is allowed to offer loans to the borrowers at a rate that is lower than the base rate. This bottom-line-rate system is measure adopted by NRB to increase the clarity and transparency of the lending process in Nepal. A credit risk premium along with the base rate is what that makes the actual pricing of a loan.

Simply, If a central bank increases the base rate, commercial banks will increase their interest rates and borrowing becomes more expensive. If the base rate falls, commercial banks will decrease their interest rates and spending is likely to increase.

Currently, BR is used as the benchmark for the interest rate of financial products in every commercial banks of Nepal. NRB has set this standard interest rate system and mandated it for all the banks in Nepal without any exception. Unless the Government asks for a change, banks are no way allowed to provide loans at an interest rate below their pre-fixed base rate.

Here, we've used the base rates from each of Nepal's 26 commercial banks as of Bhadra 2079. However, the base rates for three banks—Nabil, Prime Commercial, and Global IME Banks are based on Ashad 2079.

As per reports, Rastriya Banijya Bank (RBB), one of the 26 banks, has the lowest base rate of 8.20 percent as of Bhadra. Whereas, Civil Bank had the highest base rate 11.15%. 

Note: The company whose name has a star (*) next to it is referenced in terms of the base rates as of Ashad 2079.