Kathmandu. The main source of income for banks and financial institutions is to collect deposits at low interest rates and provide loans at high interest rates and earn profit from the interest amount in between. According to the instructions of the National Bank, the difference between the interest rate given by bankers on deposits and taken on loans should be 4.4 percent. It is called spread rate.

Banks are forced to increase the base rate in order to increase the interest rate. Now the base rate of banks is in double digits. Banks are also making strategies to collect deposits by increasing interest when they are not getting investable funds. Due to lack of resources to invest, banks are collecting money by giving attractive interest in various savings schemes. Due to this exercise, the interest rates of banks have become more expensive.

Nepal Rastra Bank has arranged that the loan interest rate should be linked to the base interest rate. Banks invest in loans by setting a certain premium on the base rate. According to the financial statements of the fourth quarter of the last financial year, the base rate of the banks is 9.46 percent on average.

At present, the base rate of half a dozen commercial banks is above 10%. The base rate of Sunrise, Civil, Kumari, Century, Citizens and Mega Bank is more than 10%. Kumari Bank has 10.57%, Civil 10.46%, Century Bank 10.23%, Citizens Bank 10.09%, Mega 10.01% and Sunrise Bank 10.01%.

At the end of June of the previous financial year, the average base rate of banks was 8.99 percent. During this period, the base rate of 4 commercial banks has increased by 3 percent. The base rate of 13 commercial banks is around 9%. The base rate of 5 commercial banks is 8 percent and the base rate of two commercial banks is around 7 percent. Currently, the lowest base rate is Nepal Bank and National Commercial Bank.

After the increase in the base rate, the banks also increase the interest on the loans. The banks have been charging a maximum of 5% premium. At present, banks with a base rate of around 10 percent lend up to 15 percent. The interest rate of banks with low base rate (base rate) is low and the interest rate is high on loans of higher ones. Therefore, when dealing with a loan through any bank, the base rate of that bank has to be lost. By doing this, it is easy to distinguish between expensive and cheap interest rates of banks.