KATHMANDU: Commercial banks have reduced interest rates for Shrawan after Nepal Rastra Bank (NRB) eased its monetary policy and excess liquidity persisted in the system.

NRB recently cut the policy rate from 5% to 4.5%, and other key rates, prompting banks to lower deposit rates.

As a result, 14 banks have slashed their maximum fixed deposit rates, 4 kept them unchanged, and 2 slightly increased them.

The average maximum interest rate for individual fixed deposits has dropped from 5.902% in Ashar to 5.687% for Shrawan.

Banks are offering slightly better rates for long-term deposits, but sluggish lending has led to over NPR 692 billion being held in the system.

NRB absorbed NPR 692.65 billion in excess liquidity by the end of Ashar—nearly double compared to last year.

Bankers say low credit demand and NRB’s rate cuts are driving the ongoing fall in interest rates.