February 3: The base rate of commercial banks has dropped in the second quarter of the current fiscal year. It has been learnt that the base rate has dropped as a result of banks reducing the cost of deposits. As the base rate has dropped, customers of the banks have started getting loans at a cheaper rate of interest.

The base rates of 27 commercial banks have dropped to a minimum of 5.61 percent and a maximum of 8.45 percent as of mid-January. The lowest base rate is of the state-owned Rastriya Banijya Bank while Civil Bank has the highest base rate.

The base rates of commercial banks were in double digits until a year ago.  Due to this, the rate of interest on loan was high during last year. But the base rates of all the banks have dropped to single digit this year.

The base rates of commercial banks have dropped between 0.00 percentage points to 2.53 percentage points in the second quarter of the current fiscal year compared to the corresponding period of last FY. The average base rate of commercial banks is 7.19 percent.

With the decline in base rate, the floating interest will also decline but it will not have any impact on fixed interest rate, says Bhuvan Kumar Dahal, chairman of Nepal Bankers’ Association.

“The base rates of all banks have declined. Now the customers can avail loan at cheaper floating interest rate,” he said.