KATHMANDU: The Nepal Bankers Association, an umbrella organization of commercial banks, has decided to raise interest rates with effect from February 13.

The association’s working committee meeting held on Friday decided to increase the interest rate despite banker’s concern over the impact of increasing it.

The association decided to increase the interest in fixed deposit to 11.03 percent for individual and 10.3 percent for institutional. Similarly, the association also decided to increase the savings account to 5 percent and call to 3.015 percent.

After the working committee meeting, the association has instructed its members to implement the decision accordingly. Banks will offer 12 percent interest rate on remittance accounts. The interest rate on personal deposits was 10.03 percent last month.

The bankers’ association president, who is also the CEO of the Agriculture Development Bank, has succeeded in deciding to increase the interest rate saying that it was Governor Maha Prasad Adhikari who requested for the increase.

Despite opposition from most CEOs, the union has decided to raise interest rates. In previous practice, the Bankers’ Association used to hold a full meeting to make such decisions. All CEOs used to be invited to the full meeting. Out of the CEOs of all the 27 banks, 18/20 CEOs of the banks would form agree to a decision and it would be taken to implementation. However, this time the CEOs were not informed about such an important decision.

In the meantime, the bankers have urged the banker’s association to rethink over its decision as it is likely to have a dire impact on the coronavirus pandemic struck economy.