Banks Cut Deposit Rates After NRB Lowers Policy Rate

Commercial banks in Nepal have lowered their deposit interest rates for the month of Shrawan, following the Nepal Rastra Bank’s recent monetary policy update. The central bank slashed key rates, including the policy rate, which was reduced from 5% to 4.5%. The bank rate was also brought down from 6.5% to 6%, while the deposit collection rate dropped from 3% to 2.75%.

In response, a majority of commercial banks adjusted their deposit interest rates. Out of 20 commercial banks, 16 have reduced their rates on personal term deposits, while the remaining four have maintained the same rates as in the previous month of Ashar. None of the banks increased interest rates for personal deposits.

Institutional deposits saw a similar trend, with 11 banks lowering their rates. However, Himalayan Bank bucked the trend by increasing its institutional deposit rate by 1%. Eight banks opted to keep their institutional deposit rates unchanged.

Among personal deposit rates for Shrawan, NIC Asia Bank and Everest Bank are offering the highest rate at 5.25%. NMB Bank and Himalayan Bank follow closely at 5%, while Siddhartha Bank has set its rate at 4.75%. Other banks like Laxmi Sunrise Bank, Nepal SBI Bank, and Global IME Bank have set their rates between 4.25% and 4.5%.

Meanwhile, Prabhu Bank, Nabil Bank, Rastriya Banijya Bank, and Kumari Bank are offering rates between 4% and 4.05%. Nepal Bank, Agricultural Development Bank, and Standard Chartered Bank are offering among the lowest, with rates ranging from 3% to 3.75%. Prime Commercial Bank has set its rate at 3.1%.

The reduction in deposit interest rates reflects the central bank’s move to ease monetary conditions and encourage lending in a bid to stimulate economic growth.