Kathmandu: Banks in Nepal have further reduced deposit interest rates for the month of Mangsir (mid-November to mid-December).
According to the new interest rates published by commercial banks for Mangsir, the average maximum interest rate on deposits has fallen by 0.26 percentage points.
In Kartik (mid-October to mid-November), the average interest rate on personal fixed deposits had already dropped by 0.26 percentage points, and it has declined even further in Mangsir. Out of 20 commercial banks, 10 have lowered their maximum rates on personal fixed deposits, while the rest have kept them unchanged. The average maximum rate on personal fixed deposits across commercial banks is now limited to just 5.03 percent.
The Gen-Z movement that took place on 8–9 September 2025 has further weakened the confidence of the private sector. As a result, the slow recovery that was expected in the economy after three years of sluggishness has been delayed in the short term due to low morale and lack of enthusiasm, prompting banks to cut deposit rates again.
Deposits have been rising continuously, but loan demand has not increased and no immediate rise is expected. This has led banks to further reduce the interest rates they announced for Mangsir.
Banks currently have more than Rs 1.1 trillion in investable funds, along with roughly Rs 850 billion in excess liquidity, creating a situation where the central bank (Nepal Rastra Bank) has had to mop up the surplus.
Although credit expansion this fiscal year is happening as anticipated in the monetary policy, only about Rs 600 billion in new loans is likely to be disbursed. Since the central bank has absorbed even more liquidity than that, bankers say that until demand for credit improves as expected, it is more necessary to reduce costs than to raise interest rates.
The maximum interest rate on personal fixed deposits at eight commercial banks has now fallen below 5 percent. Most banks are offering 5 percent or higher only on fixed deposits of 5 or 10 years or more, while rates on personal fixed deposits of 6 months or 1 year or less have dropped below 4 percent.
Governor Dr Bishwonath Paudel, through this year’s monetary policy, reduced key policy rates. In particular, he lowered the deposit collection rate (the floor of the interest rate corridor) by 0.25 percentage points to 2.75 percent, which has given banks additional encouragement to cut rates. He also reduced the policy rate and the bank rate.
Among the 20 operating commercial banks, only Global IME Bank is offering a maximum of 6 percent on personal fixed deposits, and that too only for deposits of 3 years or longer.
Agricultural Development Bank and Standard Chartered Bank will offer the lowest rates in Mangsir—just 4.70 percent on personal fixed deposits. Agricultural Development Bank is offering this rate for terms longer than 4 years, while Standard Chartered is doing so for terms above 5 years. Citizens Bank, Prime Commercial Bank, and Nabil Bank will offer 4.75 percent, and Kumari Bank will offer 4.91 percent.
Prabhu Bank has kept its rate unchanged at 4.95 percent. Similarly, Sanima Bank, NIC Asia Bank, and Himalayan Bank have also reduced their rates. Himalayan Bank cut its rate by 0.5 percentage points, while NIC Asia Bank reduced its personal fixed deposit rate by 0.75 percentage points.
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