Young Banks Take Interest Rate Leap

The increase in the number of financial institutions in the country has also pushed up interest rates. Financial institutions — especially commercial banks — are offering higher interest rates to their customers.

Within the last six months, interest rates have gone up to as high as 10.5 per cent, which was at around only three to four per cent until last year.

Kist Bank — the youngest commercial bank in the country — is offering interest rates up to10.5 per cent. “It was a promotional scheme as we are the youngest commercial bank and it got a tremendous response,” said Kamal Gnawali, CEO of the Kist Bank that offers an interest rate of 6.50 per cent on regular savings account.

NIC Bank is yet another bank that offers interest rate of 6.50 per cent on NIC savings plus deposits while normal savings account offers three per cent interest.

Sunrise Bank also offers 6.50 per cent interest.

Bank of Asia Nepal offers six per cent on amounts above Rs 50,000 payable on a half-yearly basis. Its ‘Sulav Bachat’ pays 6.50 per cent on a monthly minimum balance.

There are many other new commercial banks that offer a midrange of interest rates as well like Prime Bank and Machhapuchhre Bank which offer interests rates at four per cent. Siddhartha Bank offers five per cent and so does Nepal Bangladesh Bank.

Lumbini Bank is also in the mid-range, offering five per cent interest on savings deposits as well as savings scheme.

On one hand, the new banks are offering high interest rates while on the other older and established ones like Nepal Investment Bank, Nabil Bank, Himalayan Bank and Standard Chartered Bank Nepal are still comfortable and have maintained a more cautious rate of interest. With a large customer base, they posted the largest profits in the last fiscal year.