Base Rate of Commercial Banks Drops to Single Digits

Kathmandu – The base rate of commercial banks in Nepal has dropped to a new low, with all 20 operating commercial banks now maintaining a single-digit base rate. This decline is attributed to excess liquidity in banks and financial institutions, leading to a continuous reduction in deposit interest rates, subsequently lowering the base rate. As a result, banks are offering loans at competitive interest rates.

According to recent data, the average base rate of commercial banks has fallen to 6.48 percent, down from 6.63 percent recorded end of the Falgun month (mid-march) Among the banks, Standard Chartered Bank has the lowest base rate at 5.03 percent, followed by Rastriya Banijya Bank at 5.28 percent and Everest Bank at 5.46 percent.

Other banks have also witnessed a decline in their base rates. Nepal Bank has maintained its base rate at 5.96 percent, while Nabil Bank stands at 6.05 percent. Similarly, Nepal Investment Mega Bank has set its base rate at 6.25 percent, Krishi Bikas Bank at 6.52 percent, Global IME Bank at 6.56 percent, NMB Bank at 6.59 percent, and Sanima Bank at 6.60 percent. Likewise, Machhapuchhre Bank’s base rate is 6.68 percent, Siddhartha Bank’s is 6.69 percent, Nepal SBI Bank’s is 6.85 percent, Himalayan Bank’s is 6.88 percent, and Prabhu Bank’s is 6.93 percent.

Additionally, Laxmi Sunrise Bank has maintained its base rate at 6.93 percent, Citizens Bank at 6.95 percent, Kumari Bank at 6.99 percent, Prime Bank at 7 percent, and NIC Asia Bank at 7.41 percent.

The declining base rate has led to a reduction in loan interest rates. Since the base rate is directly linked to loan pricing, a lower base rate results in cheaper loans for borrowers. Currently, all 20 commercial banks in Nepal are offering loans at interest rates below 10 percent. Depending on the type of loan, banks apply a premium of 1 to 5 percent above the base rate, leading to variations in lending rates across different banks and loan categories.