As the interest rate of deposits continues to fall, the risk of banks and financial institutions taking money from savers at a low interest rate and depositing it in the National Bank at a higher rate than that has increased. When the interest rate of ordinary and fixed deposits started to go below 3 percent or more, the risk of giving low interest to savers on savings and higher interest than that of banks and financial institutions to keep deposits in Rashtra Bank is high.

Nepal Rastra Bank monetary management department released on Tuesday the procedures related to open market transactions (seventh amendment) also confirms that the risk of taking deposits from savers in the market and depositing them in the Rastra Bank at high prices has increased. 

Through the procedure amendment, the Monetary Management Department has provided for the permanent deposit facility (SDF) to be provided to the banks, and the minimum interest rate published for the savings and fixed deposits of local currency should be three percent or more. Earlier, in order to get this facility, there was a provision that the published minimum interest rate should be 3 percent or more to be provided on the savings of the local currency. Now, by amending it, the interest rate of fixed deposits has also been fixed at three percent. 

"For permanent deposit facilities, there is no remaining liability for inter-bank loans taken in local currency and the published minimum interest rate to be provided in local currency savings and fixed deposits should not be lower than the interest rate of this facility," it is said in the revised procedure. 

Nepal Rashtra Bank Head of Monetary Management Department, Pitambar Bhandari, said that a new arrangement has been made through the procedure for open market transactions (Seventh Amendment) with the aim that the interest rate offered by banks and financial institutions on term deposits should not be lower than that of ordinary deposits. 

'If the interest rate offered on any fixed deposit is less than three percent, the relevant banks and financial institutions will not get permanent deposit facilities,' he said, 'This directive has been issued with the aim that the interest rate of fixed deposits should not be much lower than that of ordinary savings. If a bank keeps the fixed interest rate below three percent, they should not use this facility.'' . 

"Previously, three banks published fixed deposit interest rates below 3 percent, later they corrected it and raised it higher," he added, "now no bank's fixed deposit interest rate is below 3 percent, but as there is a high possibility of it going down, the nation The bank warned at the beginning.' 

Banks and financial institutions are continuously reducing the interest rate of deposits after the loanable amount has been accumulated in banks and financial institutions. However, RBI is withdrawing money from the market twice/thrice a week through various instruments (deposit collection, permanent deposit facility etc.). According to the Rastra Bank, the money that has not matured in this way is about 3 trillion 22 billion rupees as of Tuesday. When withdrawing money from the market, the National Bank provides interest rates to banks and financial institutions. 

Experts say that in this process, banks and financial institutions have started giving lower interest rates to depositors than the interest rates they get from the National Bank. "It seems that the banks are clever to give less than three percent interest on fixed deposits but take three percent interest from the National Bank," said a former banker, "This is a way to make money without causing injustice and suffering to the savers." The National Bank should discourage this in time.' 

The weighted average interest rate on 91-day Treasury bills last October was 2.77 percent. In November 2080, such interest rate was 4.39 percent. The average interest rate of interbank transactions between banks and financial institutions is 2.91 percent last November. In October 2008, such interest rate was 3.47 percent.

Similarly, in recent months, the Aadhaar rate, a means of determining the interest rate of loans of banks and financial institutions, is also decreasing. According to which, the average base rate of commercial banks is 7.02 percent, Bikas Bank's is 8.96 percent and finance company's is 10.03 percent. In October 2008, the average base rate of commercial banks was 9.74 percent, development banks 12 percent and finance companies 13.33 percent.

According to Rashtra Bank, the average interest rate of deposits of commercial banks is 5.01 percent, Bikas Bank's 5.83 percent and finance company's 7.18 percent. In October 2008, the weighted interest rate on deposits of commercial banks was 7.76 percent, that of development banks was 9.11 percent and that of finance companies was 10.02 percent.