14th May 2025, Kathmandu
Commercial banks in Nepal have slightly reduced interest rates on personal fixed deposits for the month of Jestha. The change reflects the current market scenario, which includes high liquidity and slow credit demand. As a result, banks are adjusting their rates cautiously.
Nepal Commercial Bank Interest Rate
Average Fixed Deposit Rates Drop Slightly
The average interest rate on personal fixed deposits has declined. It dropped from 5.98% in Baisakh to 5.94% in Jestha. This marks a 0.04 percentage point decrease. Though the fall is small, it continues a trend that started earlier this year.
Out of 20 commercial banks, 14 kept their interest rates unchanged. Three banks lowered their rates, while the remaining three increased them slightly. This shows that most banks are maintaining a stable approach despite market changes.
Why Are Rates Going Down?
Two main reasons explain this trend. First, the market has enough liquidity. Banks are not facing pressure to collect more deposits. Second, loan disbursement has slowed down. With less demand for credit, banks have fewer opportunities to earn from lending.
Because of these reasons, interest rates are gradually declining. This trend is expected to continue unless lending activity picks up.
New Rates Announced for Jestha
Banks are required to publish new interest rates before the start of each Nepali month. Following this rule, commercial banks have announced their updated rates for Jestha. These rates will take effect from Thursday.
Savings Account Rates: NIC Asia on Top
Savings account interest rates now range from 3.00% to 5.10%. Most banks have fixed the lower limit at 3.00%. However, NIC Asia Bank stands out. It offers the lowest limit at 3.10%. It also provides the highest upper limit of 5.10%.
On the other hand, Nepal SBI Bank offers the lowest upper limit of 3.20%. These figures show a significant gap in savings returns depending on the bank.
As per regulatory rules, the difference between interest on general and special savings accounts cannot exceed 2 percentage points. Banks have followed this rule while setting their savings account rates.
Personal Fixed Deposits: Wide Variations
Interest rates on personal fixed deposits now range from 3.00% to 6.60%. The lowest rate, 3.00%, is offered by the Agricultural Development Bank. Meanwhile, Prabhu Bank offers the lowest limit at 5.10%.
NIC Asia Bank leads in the upper limit category too, with a rate of 6.60%. Nepal Bank, however, offers the lowest maximum rate at 5.45%.
For one-year personal fixed deposits, Laxmi Sunrise Bank provides the lowest rate at 3.50%. In contrast, Prime Commercial Bank offers the highest rate of 5.75%. This variation shows that depositors should compare rates before choosing a bank.
Institutional Fixed Deposits: Slight Adjustments
Institutional fixed deposit rates range from 3.00% to 5.60%. Several banks continue to offer the minimum rate of 3.00%. A few banks, including Himalayan Bank, Prime Commercial Bank, and Siddhartha Bank, have raised their lower limits to 3.25%.
NIC Asia Bank and NMB Bank offer the highest institutional deposit rate of 5.60%. Prime Commercial Bank goes even higher, offering 5.75% in some cases. On the flip side, the Agricultural Development Bank offers the lowest maximum institutional rate at 3.25%.
One-Year Institutional FDs: Low Returns
Interest on one-year institutional fixed deposits remains modest. The rates vary from 3.00% to 3.51%. NIC Asia Bank offers up to 5.00%, making it one of the top performers in this category as well.
Outlook: Further Declines Possible
Interest rates are moving downward, reflecting current banking conditions. Most banks are avoiding major changes, preferring a wait-and-see approach. As long as loan demand stays low and liquidity remains high, this trend could continue.
Investors should remain alert. Comparing rates between banks can make a significant difference, especially for fixed deposits. Depositors may also want to consider shorter tenures, as banks offer similar returns with more flexibility.
For more: Nepal Commercial Bank Interest Rate