Commercial banks will raise interest rates on term deposits starting next week – myRepublica
KATHMANDU, September 15: Commercial banks in Nepal will raise their interest rates on time deposits after the Nepal Bankers Association (NBA) decided not to intervene with banks to fix their interest rates.
According to the bankers, the NBA meeting held on Thursday decided not to get involved in setting interest rates provided by individual banks. Previously, banks had reached consensus on not changing interest rates despite the shortage of liquidity with them.
Due to the consensus, the interest rate has remained stable for the past six months, although the Nepal Rastra Bank (NRB), through monetary policy, has been urging banks to raise their interest rates . The International Monetary Fund has also recommended that the central bank raise bank interest rates, citing the ongoing liquidity crisis.
On average, banks offer interest rates of 11.03% per annum on fixed retail deposits. For institutional depositors, the interest rate is 9.03%.
The NRB has asked banks not to increase interest rates by more than 10% at a time. Based on the rule of the central bank, the interest rate on fixed deposits of individuals will reach up to 12.13% per annum.
Previously, the NRB had also issued a circular allowing banks to revise their interest rates on deposits each month if they so wished. But banks can only change lending rates on a quarterly basis.