April 9: Commercial banks have decided to lower the interest rates on deposits effective from mid-April. The commercial banks decided to slash the interest rate after Nepal Rastra Bank lowered the interest rate on loans provided to the commercial banks by 1 percent. The new rates of interest provided by the commercial banks will be less by around 1 percent. The banks have already started to make public the new interest rates.

They have also decided to lower the interest rates for regular savings, fixed deposit and call deposit accounts by 1 to 1.5 percent.

The banks will also reduce the interests on loans from mid-March after calculating the base rate

Meanwhile, the interest rates on personal savings accounts and institutional savings accounts will be respectively 1 percent and 1.5 percent lower than the current rates.

Currently, the banks have been giving interest up to 9.25 percent on personal savings account, which will be lowered to between 8 to 8.25 percent.

All the 27 member banks of Nepal Bankers’ Association have agreed to lower the interest rate on deposits. In this regard, the commercial banks have already published the new rates of interest since Wednesday. However, the interest rate of fixed deposit accounts will be lowered only after the maturity period. Chairman of Nepal Bankers’ Association Bhuvan Dahal said that the interest rate of new fixed deposit accounts and those renewing their agreements will be lower than the current rate.

Out of the total deposits in banks, around 50 percent of the amounts are under fixed deposit accounts. Thirty percent of the accounts are savings accounts. Then remaining are current accounts, call deposit accounts and other types of accounts.

“The economy is on the verge of collapse. We have to be careful about preventing such collapse.The central bank has reduced the interest rate on loan from 6 percent to 5 percent. Therefore, the banks are under pressure to reduce the interest rate,” said Dahal.