The Nepal Rastra Bank (NRB) has announced that the maximum and minimum interest rates offered by banks and financial institutions on deposit accounts cannot be differentiated by more than 5 percentage points.
This is likely to increase the interest rate on savings account which had fallen off a cliff recently.
Currently, Nepali commercial banks have been offering fixed deposit interest rates up to 9.5% p.a. while the interest rate on some ordinary savings accounts stood at just 1.5% p.a.
The provision once implemented will mean the difference between the highest interest rate on fixed deposits and the lowest interest rate on savings account will not be more than 5 percentage points.
The central bank took this decision following its quarterly review of the existing monitory policy meeting yesterday.
NRB Governor Maha Prasad Adhikari also stated that this change was announced so that the depositors would not be adversely affected by these low rates.
He further added that flexibility in the policy would be maintained in view of the government’s goal of economic growth and the entire economy.