Commercial Banks Adjust Interest Rates for Magh 2081

The commercial banks in Nepal have announced their revised interest rates for the month of Magh 2081. A comparative analysis reveals that most banks have maintained the interest rates from Poush, with only a few making adjustments. Out of the 20 commercial banks analyzed, 17 banks have decided to continue with the same maximum interest rates for individual term deposits. Meanwhile, two banks have lowered their rates, and one has increased its rate.

Nepal SBI Bank and Agriculture Development Bank have reduced their maximum interest rates for individual term deposits. Nepal SBI Bank decreased its rate from 6% in Poush to 5.5% in Magh, a significant drop of 0.5 percentage points. Similarly, Agriculture Development Bank slightly reduced its rate from 5.57% to 5.51%. On the other hand, Laxmi Sunrise Bank raised its rate from 5.5% to 5.75%, showcasing an upward adjustment of 0.25 percentage points.

For institutional term deposits, Nepal Bank registered the largest reduction, cutting its maximum rate from 4.7% to 4.15%, a decrease of 0.55 percentage points. However, the majority of banks retained their institutional deposit rates, indicating stability in this category.

The overall average interest rate for individual term deposits declined slightly from 6.0165% in Poush to 6.001% in Magh, a drop of 0.0155 percentage points. Similarly, the institutional average rate saw a negligible decline of 0.0275 percentage points, falling from 4.528% to 4.5005%. These minor changes reflect a cautious approach by banks amid prevailing economic conditions.

The reductions in interest rates by some banks suggest a potential easing of liquidity constraints, allowing banks to offer slightly lower returns on deposits. However, the decision of most banks to maintain their rates indicates that competition for deposit mobilization remains strong. Laxmi Sunrise Bank's rate hike could be a strategic move to attract more individual depositors.

The marginal decline in average rates also highlights a balanced approach by the banking sector, ensuring depositors still receive attractive returns while allowing banks to manage their interest expense. This balance is crucial in maintaining stability in the financial system, particularly in a challenging economic environment.