Majority of banks reduce their interest rates on deposits for Mangsir

Commercial banks have reduced the interest rates offered on deposits for the month of Mangsir (mid-November to mid-December). The maximum average interest rate on individual fixed deposits at 20 commercial banks has decreased. In Kartik (mid-October to mid-November), this average rate stood at 6.18 percent, but it has now dropped to 5.96 percent in Mangsir, marking a 0.22 percentage point decline within a month. In Kartik, the rate had already fallen by 0.21 percentage points compared to Ashwin.

According to public notices, the fully government-owned Rastriya Banijya Bank has slightly increased the maximum interest rate on individual fixed deposits for Mangsir. Eight banks-Nepal SBI, Nepal, Sanima, Investment Mega, Siddhartha, Prabhu, Himalayan, and Everest) have kept their maximum rates unchanged. Meanwhile, 11 banks have reduced their rates. They include Agriculture Development, Laxmi Sunrise, Global IME, Kumari, Prime, Citizens, Nabil, Standard Chartered, Machhapuchhre, NMB, and NIC Asia.

In Mangsir, NIC Asia Bank will offer a maximum interest rate of 6.79 percent on individual fixed deposits, down from the 7 percent offered in Kartik.

Banks are adopting a strategy of offering slightly higher interest rates on long-term individual fixed deposits while lowering rates on short-term deposits. As deposit interest rates decline, the base rate decreases, which provides relief to borrowers through lower loan interest rates.

The central bank has mandated that the difference between the upper limit of interest rates on individual fixed deposits and the minimum rate for savings deposits should not exceed 5 percent.

For institutional fixed deposits, the interest rate must be at least 1 percentage point lower than for individual fixed deposits. Conversely, banks can offer 1 percentage point higher interest rates on individual remittance fixed deposits.

Banks are lowering deposit interest rates because, despite having sufficient loanable funds, loan disbursement has not increased proportionally. This is said to be leading to an increase in the cost of funds for banks. 

 

Interest Rates on Individual Fixed Deposits Set by Banks

Bank	Kartik Interest Rate %	Mangsir Interest Rate %
Agriculture Development	5.75	5.53
Rastriya Banijya	5.8	6
Nepal SBI	6	6
Laxmi Sunrise	6	5.75
Global IME	6.25	5.75
Kumari	6.09	5.79
Prime Commercial	6	5.75
Nepal	5.75	5.75
Sanima	6.15	6.15
Citizens	5.75	5.55
Nabil	6.25	5.75
Investment Mega	6.5	6.5
Siddhartha	6	6
Standard Chartered	6.5	6.25
Machhapuchhre	7	6
Prabhu	6.2	6.2
NMB	6.5	5.75
NIC Asia	6.79	6.79
Himalayan	6.25	6.25
Everest	6	6