Fixed Deposits Decline 5.3%: Are Nepali Investors Shifting Toward Short-Term Savings?

Nepal’s banking data show a concerning trend — fixed deposits fell by 5.3 percent year-on-year, totaling Rs. 3.48 trillion by mid-August 2025, according to the latest Other Depository Corporation Survey released by Nepal Rastra Bank (NRB). This marks the first notable contraction in long-term savings in recent years, raising questions about changing investment behavior among Nepali depositors.

The data reveal that residential fixed deposits dropped by 5.4 percent to Rs. 3.46 trillion, while non-residential deposits — mostly institutional and remittance-linked accounts — rose modestly by 5.5 percent. Analysts say this indicates that households are increasingly withdrawing or converting their long-term deposits into more flexible options such as call or saving deposits.

Financial experts attribute this decline to several factors. First, the reduction in fixed deposit interest rates over the past year made such instruments less attractive. Second, investors are showing a preference for liquidity, choosing accounts that provide quick access to funds amid economic uncertainty. The growth of short-term deposit products and digital savings accounts also supports this behavioral shift.

Meanwhile, call deposits surged by 34.3 percent and saving deposits rose sharply by 39.2 percent in the same period — signaling a migration from long-term to short-term savings. This shift may temporarily reduce banking sector stability, as short-term deposits are more sensitive to market shocks. However, it also reflects greater financial activity and cash circulation within the economy.

Economists suggest that the NRB should monitor this trend closely, as prolonged declines in fixed deposits could limit banks’ capacity for long-term lending — especially for infrastructure and housing projects that rely on stable, long-duration funding sources.