KATHMANDU: The umbrella association for commercial banks, Nepal Bankers Association (NBA), has given commercial banks the right to determine the interest rate.
The decision was made at a meeting held on Thursday to maintain interest rate of commercial banks in Ashoj (mid-September to mid-October). Banks have not raised interest rate for the past six months.
NBA implemented an open interest rate policy due to the current liquidity crisis in commercial banks.
With this, banks are free to raise and determine the interest rate for Ashoj. However, a clause restricts banks to fix excess interest rate as the clause mandates that interest rate could be fixed by modifying the average rate announced earlier by just 10 percent.
Banks currently offer fixed deposit interest rates to individuals and institutions at 11.03 percent and 9.03 percent, respectively. Remittance interest stands at 12.03 percent and institutions get a maximum of 9.53 percent interest.
Hence, the interest rate can now be hiked by 10 percent, making it 12.13 percent for individuals and 9.93 percent for institutions.
Nepal Rastra Bank also proposed the policy of raising the interest rate through the monetary policy of the current fiscal.
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