Kathmandu, July 16: The latest monetary policy introduced by Nepal Rastra Bank Governor Maha Prasad Adhikari is already having a visible impact: commercial banks across the country have sharply lowered interest rates on fixed deposits. Following the policy unveiled last Friday for the fiscal year 2082/83, the bank rate— the upper limit of the interest rate corridor—was reduced from 6.5% to 6%, and the deposit collection rate—the lower limit—was brought down from 3% to 2.75%. The policy rate was also cut from 5% to 4.5%.

These measures aim to inject more liquidity into the economy. In response, most banks have revised down their interest rates for the month of Shrawan, offering significantly less than they did in Asar. For example, Agricultural Development Bank reduced its rate from 5.45% to 5.40%, while Everest Bank brought it down from 6.55% to 6.25%.

Nepal Bank also trimmed its rate from 5.45% to 5.40%, and Laxmi Sunrise Bank cut it from 5.75% to 5.50%. NIC Asia followed suit, reducing its fixed deposit interest from 6.55% to 6.25%. Prabhu Bank made one of the steepest cuts—slashing the rate from 6.10% to just 4.25%.

However, not all banks followed this trend. Standard Chartered Bank slightly increased its rate from 6.25% to 6.26%, while Himalayan Bank went from 5.5% to 6%. Some banks like Global IME, Siddhartha, and NMB maintained their existing rates. Others, including Prime Commercial, Kumari, Sanima, and Investment Mega Bank, trimmed their rates moderately, with reductions ranging from 0.15 to 0.30 percentage points.

As interest rates tumble, concerns are rising that the public might reconsider parking their money in banks. For many depositors, especially those relying on interest income, the drastic cuts may trigger capital flight to riskier but higher-yielding alternatives. This marks the first time in recent years that banks have collectively slashed deposit rates this significantly, signaling that the downward trend may continue if the central bank maintains its liquidity-friendly stance.

People’s News Monitoring Service