NRB issues new directives on interest rates

Kathmandu, Nov. 15

The Nepal Rastra Bank has issued fresh directives to the banks and financial institutions (BFIs) on the methods of fixing interest rates.

Amending its unified directives, 2020, it directed the commercial banks, development banks and finance companies not to exceed 10 per cent in their existing interest rates.

With this, the BFIs can change their interest rates for deposits (except call deposits and some accounts as mentioned by the central bank) by 10 per cent of the average maximum interest rate and minimum interest rate they published last month.

It means that a commercial bank having 10 per cent interest rates on deposits last month can raise the rate up to 11 per cent.

Earlier, all BFIs could increase the interest rates in all kinds of deposits by 10 per cent from the previous month.

Likewise, interest rate for the fixed deposits collected through bidding should not exceed the interest rate published by the bank. However, renewal of the existing fixed deposits can be made with the increment of 0.1 per cent in the published interest rate.

The central bank has annulled the provision to allow the banks to increase the interest of deposits other than institutional fixed deposits by 0.5 per cent.  

Published in The Rising Nepal daily on 16 November 2021.