Jan 22: The commercial banks have raised their base interest rate on loans by more than two point percent effective from mid January, citing an increase in their expenses for the interest on deposits.

Showing the ongoing shortage of loanable funds, almost all the ‘A’ class financial institutions have raised interest rates on deposits in the past few months in order to collect more funds in deposits. According to the financial reports unveiled by the commercial banks, Civil Bank has maintained its base rate at 9.74 percent, the highest of all the banks.

Similarly, NIC Asia has set its base rate at 9.54 percent followed by that of 9.15 percent of NCC Bank, 9.08 percent of Citizens Bank and 8.98 percent of Prime Commercial Bank. The base interest rates of Rastriya Banijya Bank and Standard Chartered Bank Nepal are below seven percent at 6.60 percent and 6.83 percent, respectively.       

Banks charge interest rates on lending by adding premiums to their base rates. Based on the new base rates, the cost of borrowing has gone up despite the central bank’s effort to curb the increasing interest rate on the banks’ loans.

source: republica, 22 jan 2022