Interest Rate Cut: Nepal’s Banks Lower Deposit Rates Amid Excess Liquidity

Nepal’s 20 commercial banks have published their revised interest rates for Bhadra, with deposit rates declining further compared to Shrawan amid continued high liquidity in the banking system. The average maximum interest rate on individual deposits has fallen from 4.1675% in Shrawan to 4.136% in Bhadra, a decline of 0.0315 percentage points. Similarly, the average rate for institutional deposits has decreased from 3.116% to 3.081%. Five banks have reduced their deposit rates for the month. Siddhartha Bank made the largest cut, lowering its individual deposit rate by 0.29 percentage points to 3.76% and its institutional rate by 0.20 percentage points to 3.05%. Nepal Bank also reduced its individual rate by 0.10 percentage points to 4.15% and its institutional rate by 0.50 percentage points to 3.50%. Citizens Bank, Kumari Bank and Standard Chartered Bank have also lowered their rates, setting individual deposit rates at 3.85%, 3.76% and 3.80%, respectively. Meanwhile, 15 banks have kept their interest rates unchanged from Shrawan. Nabil Bank and Prabhu Bank continue to offer the highest maximum individual deposit rate at 4.55%. Nepal Investment Mega Bank, NMB Bank, Sanima Bank, Machhapuchchhre Bank, Rastriya Banijya Bank and Global IME Bank are among the institutions maintaining their existing rates. The continued decline in deposit rates reflects weak credit demand and persistent excess liquidity, prompting banks to reduce their cost of funds by lowering deposit interest rates.