Commercial Banks Slash Fixed Deposit Rates, Average Falls to 5.58% for Individuals

Commercial banks in Nepal have reduced their fixed deposit rates effective from the month of Bhadra. Influenced by Nepal Rastra Bank’s monetary policy, improved liquidity in the financial system, and growing competition in the banking sector, the interest rates have been revised downward.

In Shrawan, the average fixed deposit rate for individual accounts stood at 5.78 percent. However, in Bhadra, it has dropped to 5.58 percent. Similarly, the average rate for institutional accounts has declined from 4.12 percent to 3.96 percent. This indicates that banks are facing less pressure to attract deposits at high rates, as liquidity in the system remains comfortable.

Seven Banks Cut Deposit Rates

A total of seven commercial banks have lowered their rates this month. Agriculture Development Bank fixed 5.20 percent for individual accounts and 2.85 percent for institutional accounts. Everest Bank revised its rates to 5.75 percent for individuals and 4.75 percent for institutions. Kumari Bank set 5.21 percent for individuals, while Nepal SBI Bank fixed 5.25 percent for individuals and 4.25 percent for institutions.

Similarly, Standard Chartered Bank now offers 5.75 percent for individuals and 2.75 percent for institutional accounts. Siddhartha Bank revised its rates to 5.50 percent for individuals and 4.00 percent for institutions. Sanima Bank fixed 5.25 percent for individuals and 3.05 percent for institutions. Collectively, these seven banks have pulled the overall market average down.

Banks Holding Steady

Other major banks — including Nepal Bank, Laxmi Sunrise, Global IME, Prime, Citizens, Prabhu, Machhapuchchhre, NMB, Himalayan, Nabil, Rastriya Banijya, Nepal Investment Mega, and NIC Asia — have kept their rates unchanged for the month of Bhadra.

Why the Rates Fell

According to bankers, the primary reason behind the downward revision is the improved liquidity situation. In the past, when liquidity was tight, banks had to offer higher deposit rates to attract funds. Now that liquidity has eased, banks are no longer compelled to maintain high interest levels.

For depositors, particularly institutional account holders, the reduced rates may lower the incentive to keep funds in fixed deposits, potentially pushing them towards alternative investment options. On the other hand, businesses and borrowers could benefit, as falling deposit rates typically pave the way for cheaper loans in the near future.

Market experts suggest that as some banks have already cut rates, competitive pressure may force others to follow suit in the coming months. If the trend continues, the overall lending environment is expected to become more investment-friendly, boosting credit flow into productive sectors.