Declining Interest Rates and Increase in Margin Loans for Share Investment

Interest rates in Nepal's banks and financial institutions have been continuously declining. According to recent data, the weighted average interest rate on loans for commercial banks in Nepal stood at 8.11% in the month of Baishakh 2082, a decrease of 2.33% compared to the previous year. This is a reduction from 10.34% in Baishakh 2081. The interest rates for development banks and finance companies have also decreased, with development banks' loan rates at 9.45% and finance companies' loan rates at 10.31%, both lower than last year.

Similarly, the interest rates on deposits have also seen a decline. The weighted average interest rate on deposits for commercial banks is now 4.37%, a 2% drop from the previous year. Development banks' deposit interest rates are 5.11%, and finance companies' deposit rates are 6.15%.

Meanwhile, the decrease in interest rates has resulted from improved liquidity in financial institutions and reduced loan flows. In Baishakh 2082, the interest rate for 91-day Treasury bills dropped to 2.95%, down from 3.02% the previous year. The interbank lending rate in Baishakh 2082 was also at 3.00%, compared to 2.88% in Baishakh 2081.

Investor interest in the stock market has increased as well. According to data from Nepal Rastra Bank, margin loans for stock investments increased by NPR 1.39 billion (139.87 million) in the month of Baishakh alone. This indicates growing attraction towards margin loans secured by stocks.

This decline in interest rates has benefited customers by lowering the interest on loans and deposits, while also improving liquidity management for financial institutions.