Runaway interest rates could hinder post-pandemic recovery

Amid loanable funds shortage, banks are hiking interest on deposits, which could make borrowing expensive.

Guru Neupane, a promoter of the Upper Chameliya Hydropower Project, is worried about the potential rise in bank interest rate. In the face of a liquidity crunch, commercial banks are competing to woo depositors, offering high interest rates on deposits. This in turn could lead to a rise in the interest rate on loans as well.