20 commercial banks reduced the interest rate on ordinary deposits, 15 reduced the interest rate on one-year term deposits, four fixed term interest rates, one increased
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For July, all commercial banks have reduced interest rates on deposits. According to the interest rate list published by the banks on Wednesday, 20 commercial banks have reduced the interest rate of ordinary deposits and 15 have reduced the interest rate of fixed deposits for July. But four commercial banks have not reduced interest rates on fixed deposits. A bank has increased the interest rate on fixed deposits.
According to the new interest rate, the average interest rate of one-year personal term deposits in commercial banks for July has been maintained at a maximum of 5.698 and a minimum of 3.604 percent. In June, the maximum average interest rate is 5.94 and the minimum is 3.891 percent.
The average interest rate of ordinary deposits in commercial banks has remained at a maximum of 3.905 and a minimum of 2.771 percent. This June, the maximum interest rate is 4.353 and the minimum is 3.011 percent. Thus, as the interest rate of deposits decreases, the base rate of banks and financial institutions also decreases, so the interest rate of loans also decreases automatically.
With banks reducing interest rates on deposits, the minimum interest rate on fixed deposits is lower than the maximum interest rate on ordinary savings. In such a case, the depositor wants to keep more money in the ordinary deposit than the term. Why did all 20 commercial banks reduce the interest rate on ordinary deposits at the same time for July when there is sufficient liquidity in the bank? The main reason for this is to reduce the lower limit of the interest rate corridor through the monetary policy of the National Bank.
National Bank has linked the lower limit of the corridor with the interest rate given to banks and financial institutions for collecting deposits, on the other hand, the interest rate of deposits cannot be made lower than the interest rate of deposit collection. Therefore earlier the lower limit of the corridor or interest rate limit for deposit collection was 3 percent. Through the new monetary policy, the National Bank has reduced the lower limit of the corridor to 2.75 percent. Bankers say that banks have reduced the interest rate on ordinary deposits to make it equal to the rate of the lower limit of the corridor.
'The policy rate (the lower limit of the corridor) came to 2.75, the banks would have made that much. But many have not reduced the interest rate of fixed deposits," said Santosh Koirala, president of the Nepal Bankers Association, "now there is more liquidity around 10 billion, so it is not possible to give a high interest rate on deposits."
The interest rate is determined by the market. It is natural that they pay low interest when liquidity is sufficient and high interest when liquidity is scarce. Therefore, there is no need to panic so much," he added, "As the credit increases gradually, the interest rate of deposits will also increase. The source is not needed now, so there is no option to reduce the interest rate.' After the implementation of the said provision, the interest rate of deposits will decrease again. Because the new arrangements made in the monetary policy have come to reduce the interest rate, increase the credit flow and increase the lending capacity of the banks. Therefore, since there is no possibility of extending many loans at once, experts in the financial sector say that in the coming few days/months, the interest rate of the loan will decrease even more.
The average base rate of commercial banks fell to 6.09 percent in May last year after prolonged excess liquidity in the financial system. The average base rate of development banks is 8.29 percent and that of finance companies is 9.02 percent. In May 2081, the average base rate of commercial banks was 8.17 percent, development banks 9.96 percent and finance companies 11.46 percent.
Aadhaar rate is an important base on which banks and financial institutions determine the interest rate of loans. Banks cannot lend at less than the base rate. Therefore, banks and financial institutions will determine the loan interest rate by adding a few percent premium to the base rate. Thus the premium added to the base rate cannot be changed throughout the loan tenure. If there is a decrease in the base rate, the interest rate of the loan will also decrease by adding the premium fixed at the beginning to the changed rate. So now the loan interest rate is also below one point (10 percent). Experts say that as banks reduce the interest rate of deposits, the interest rate of loans will also automatically decrease.
The weighted average interest rate on deposits of commercial banks is 4.29 percent, 5.02 percent of development banks and 6.09 percent of finance companies till the end of May. In May 2081, the weighted average interest rate on deposits of commercial banks was 6.17 percent, development banks 7.07 percent and finance companies 8.28 percent.
Last May, the weighted average interest rate of commercial bank loans was 7.99 percent, Bikas Bank's 9.40 percent and finance companies' 10.22 percent. In May 2081, the average interest rate on loans of commercial banks was 10.15 percent, development banks 11.63 percent and finance companies 12.85 percent.
In the 11 months of the current fiscal year, deposits in banks and financial institutions have increased by 5 trillion 17 billion 600 million (8 percent). During the same period last year, such deposits increased by 5 trillion 14 billion 57 crores (9 percent). In the last 11 months, loans to the private sector have increased by 4 trillion 7 billion 62 crores (8 percent). In the same period last year, such loans increased by 2 trillion 46 billion 800 crores (5.1 percent), according to the monthly report of Rashtra Bank.
According to the data of Rashtra Bank, in the last 11 months (from July to May), 15 trillion 32 billion 93 crore rupees have been received through remittance. This is an increase of 15.5 percent compared to the same period last financial year. Till May of the last financial year, remittances of 13 trillion 27 billion rupees were received and the growth rate was 16.9 percent. With the increase in remittances, more liquidity has accumulated in banks and financial institutions.
