Nepali commercial banks lower deposit interest rates amid slowdown and pressure from stakeholders

Nepali commercial banks have decided to lower the interest rates on bank deposits, with individual fixed deposits at 9.99% and institutional deposits at 7.99%.

The interest rates for savings accounts will range from 5.4% to 7.4%. This decision was made after pressure from stakeholders and a decrease in demand for loans due to high interest rates. However, it may take up to three months for interest rates on loans to decrease.

The Nepal Rastra Bank Governor has stated that banks are free to set their interest rates based on market conditions.

Banks have excessive liquidity, with a surplus of more than Rs 163 billion, and a credit-deposit ratio of 85.45%, allowing them to lend more than Rs 200 billion.

Banks fear a possible rise in bad debts at existing interest rates, which must be lowered to maintain the maximum spread of 4% set by the central bank.