Fixed Deposits Dominate at 48%: What It Means for Liquidity and Savings Trends

As of Saun End, 2082 (Mid-August 2025), nearly half of Nepal’s total bank deposits (48.14%) are in fixed deposit accounts, signaling a strong preference among savers for secure, interest-bearing instruments. In comparison, savings deposits account for 37.37%, while current and call deposits together make up just around 14%. This deposit structure highlights both the strengths and weaknesses of Nepal’s financial system.

On one hand, the dominance of fixed deposits provides stability in bank funding, as these deposits are locked in for longer maturities and cannot be withdrawn easily. This allows banks to plan their lending portfolios with greater certainty and reduces the risk of sudden liquidity shortages. It also reflects the behavior of households and businesses that prefer guaranteed returns in a volatile economic environment, particularly when alternative investment avenues such as capital markets or real estate face uncertainty.

On the other hand, this reliance on fixed deposits increases the cost of funds for banks, as fixed deposits carry higher interest rates compared to savings or current accounts. With the weighted average fixed deposit rate at 5.33%—much higher than savings (3.07%) or call deposits (1.04%)—banks face growing interest expenses, which can compress profit margins if lending rates decline or credit demand slows. Over time, this could make banking operations less efficient unless credit growth outpaces rising costs.

From a liquidity perspective, while fixed deposits provide stable funding, they reduce banks’ flexibility. High levels of fixed deposits mean that the share of low-cost, easily accessible deposits is limited. In times of stress, banks may need to rely more on interbank borrowing or central bank liquidity support, which could elevate systemic risks.

Overall, the dominance of fixed deposits reflects a cautious savings culture, prioritizing security over flexibility. For the broader economy, this trend underscores strong financial intermediation, but it also highlights challenges for banks in managing profitability and liquidity as they balance savers’ expectations with lending growth.