Banks, financial institutions reduce interest rate

Banks and financial institutions (BFIs) have decided to implement the decision to reduce the interest rate beginning from Wednesday.

Earlier, the Nepal Bankers’ Association, an umbrella organisation of commercial banks, agreed to reduce the premium rate on loans by one per cent and the interest on savings by 0.4 per cent from March 15, the BFIs informed about this through a notice today.

According to Association chair Sunil KC, now they are focused on capping the interest rates. As per the revised provisions, banks will charge premium rates on loans up to five per cent instead of six per cent and will provide 6 to 8 per cent interest on normal savings. Prior to this, the bank interests on normal savings were 6.42 to 8.42 per cent. The interest rate on fixed deposits is unchanged and it remains at 11 per cent.

Similarly, towards institutional savings, a 9 per cent interest rate has been fixed and towards the remittance fixed deposit, it is 12 per cent.

Likewise, the Development Bankers’ Association, an umbrella organisation of development banks, decided to reduce the interest on fixed deposits by 0.25 per cent beginning from March 15. As per the revised provision, commercial banks shall provide 11.60 per cent interest on fixed deposits (individual) with one or more than one-year term and 11.50 per cent on deposits with less than one-year tenure.

Towards the institutional accounts, now development banks provide 9.60 per cent interest on the fixed deposits and 6.60 to 8.60 per cent on the normal savings.

Similarly, Nepal Financial Institutions Association has decided to deduct the interest on fixed savings of a one-year term by 0.20 per cent and provide it by 11.90 and by 0.15 per cent on the deposits with a tenure of over three months.