Commercial Banks Maintain Deposit Interest Rates in October

Kathmandu. The downward trend in deposit interest rates of commercial banks, which has been ongoing for a long time, has been halted in the month of October. According to the new interest rate tables published by 20 commercial banks for the third month of the current fiscal year, i.e., October, most banks have maintained the interest rates from the month of August. According to the data published on Wednesday, only four out of twenty commercial banks have reduced the maximum interest rate on individual fixed deposits, while the remaining 16 banks have kept the interest rates from August unchanged in October. The average interest rate of commercial banks as a whole has seen a slight decline. In previous months, due to the continuous high growth rate of deposits compared to loans in banks, there was a surplus of liquidity (investable funds). In the last fiscal year alone, bank deposits increased by approximately 10 trillion rupees, while loan investments increased by only about 4 trillion rupees. With excess liquidity, banks have been continuously cutting deposit interest rates to reduce the cost of funds. However, the situation has started to change recently. Despite the damage in the Rasuwagadhi area on September 10, the demand for loans in the market has started to look positive. With the beginning of the current fiscal year and the upcoming major festivals like Dashain and Tihar, there has been an improvement in the opening of letters of credit (LC). As the demand for loans is gradually becoming positive, banks are not in a mood to further reduce interest rates immediately. What is the interest rate of which bank? For the month of October, four banks, Everest, Nabil, Standard Chartered, and Kumari, have reduced interest rates. Among these, Everest Bank has made the most aggressive cut. According to the data published by the banks, Everest Bank has reduced the maximum interest rate on individual fixed deposits from 4.05 percent in August to 3.5 percent in October, a reduction of 0.55 percentage points. Similarly, Nabil Bank, one of the large banks, has also reduced the interest rate by 0.30 percentage points. Nabil, which offered 4.55 percent interest in August, has set 4.25 percent for October. Likewise, Standard Chartered Bank has reduced it by 0.05 percentage points to 3.75 percent, and Kumari Bank has proposed an interest rate of 3.73 percent, a reduction of 0.03 percentage points. 5 Banks Offering Interest Below 4 Percent Due to the continuous reduction in interest rates, the maximum interest rate on individual fixed deposits in 5 out of 20 commercial banks has fallen below 4 percent for the month of October. These include Everest Bank at 3.5 percent, Kumari Bank at 3.73 percent, Standard Chartered at 3.75 percent, Siddhartha Bank at 3.76 percent, and Citizens Bank at 3.85 percent. Although Siddhartha and Citizens did not reduce interest rates in October, their rates were already below 4 percent. Interest Rates of 16 Banks Stable, Prabhu Bank Highest The remaining 16 commercial banks have maintained the interest rates from August. Among them, half a dozen banks have set the interest rate at exactly 4 percent. Himalayan, Prime Commercial, NIC Asia, Laxmi Sunrise, Rastriya Banijya Bank, and Global IME Bank will offer a maximum of 4 percent interest on individual fixed deposits for October. Similarly, Nepal SBI Bank has maintained 4.1 percent, and Krishi Bikas Bank and Nepal Bank have maintained 4.15 percent interest rates. Prabhu Bank is the bank offering the highest interest in October. Prabhu Bank has maintained the August interest rate of 4.55 percent in October as well. Likewise, Machhapuchchhre, NMB, Sanima, and Nepal Investment Mega Bank have also maintained the same interest rate of 4.5 percent from August. Slight Decline in Average Interest Rate Banks are required to publish the deposit interest rates applicable for the next month on the last day of each month. According to the published data, the average maximum interest rate on individual fixed deposits of 20 commercial banks in August was 4.14 percent. In October, with only 4 banks reducing interest rates, this average rate has decreased by 0.05 percentage points to 4.09 percent. The cycle of declining interest rates, which has been ongoing for a long time, appears to be reaching its lower point and moving towards stability.