Money & Finance

The Nepal Bankers Association has decided to reduce the interest rates on deposits starting January 15.

President of the Bankers' Association Sunil KC said on Wednesday that the association decided to lower the interest rate on deposits, starting January 15, as per the Nepal Rastra Bank directive.

Currently, commercial banks have been offering a maximum interest rate of 12.33 per cent on term deposits.

The Nepal Rastra Bank has arranged to maintain a difference of 2 percentage points between the interest rates of individual and institutional fixed deposits. Accordingly, the maximum interest rate on institutional fixed deposits is 10.133 per cent.

Similarly, the central bank provision requires commercial banks to keep a difference between the maximum and minimum interest rates on fixed deposits and savings at 5 per cent.

The Nepal Rastra Bank has stipulated that commercial banks can only reduce the interest rate on deposits by 10 per cent after obtaining the average maximum interest rate on fixed deposits from commercial banks.

Chairman KC said the decision had been made to eliminate the interest rate on term and savings accounts under the same arrangement.