KATHMANDU: Commercial banks have further reduced their deposit interest rates for the upcoming month (mid-June to mid-July) as credit demand fails to keep pace with surging deposits.

To minimize their cost of funds, 7 out of 20 commercial banks slashed their rates, while 13 kept them unchanged.

No bank increased its rates.

Because Nepal Rastra Bank (NRB) bars banks from lowering regular savings rates below its 2.75 percent floor, institutions have aggressively cut fixed deposit rates instead.The average maximum interest rate on individual fixed deposits fell from 4.34 percent in the previous month to 4.27 percent for the mid-June to mid-July period.

NMB Bank and Rastriya Banijya Bank offer the highest rates at 4.75 percent.

Meanwhile, Kumari Bank and Standard Chartered Bank dropped their maximum rates below the 4 percent threshold to 3.91 percent and 3.95 percent, respectively, while Himalayan, NIC Asia, Laxmi Sunrise, and Prime Commercial Bank all adjusted their maximum rates down to exactly 4 percent.

With credit growth remaining stagnant, commercial banks have now parked over Rs 1 trillion in excess liquidity with the central bank.