Kathmandu. In October, commercial banks are going to increase the interest rate of loans. Banks have prepared to increase the interest rate of loans by increasing the base rate. According to Nepal Bankers Association sources, the interest rate of loans is also going to be increased by increasing the base rate by 0.5 percent. However, the official decision of the Bankers Association has not been made. According to the source, the decision will be taken at the union meeting today.

There is a policy arrangement of Rashtra Bank that allows banks to change the Aadhaar rate in three months. According to the same arrangement, banks are going to increase the base rate. Banks determine the interest rate by adding a certain percentage premium to their base rate. When the base rate of banks increases, the interest rate of loans also increases automatically. When the base rate decreases, the interest rate of banking loans also decreases.

Banks have increased the interest rate of deposits for the past 7 months to 12.13 percent last October. Now banks are giving up to 15 percent interest on remittance accounts. In the month of October, banks are offering 12.13 percent interest rate on individual term deposits and 10.13 percent interest rate on institutional deposits by adding 10 percent.

Even now most of the commercial banks base rate is in double digits. Borrowing from banks with base rates in double digits will cost more. Now the base rate of banks is certain to reach 11 percent.

At present, among the banks, Citizens Bank's base rate is the highest, while Rashtriya Commercial Bank's base rate is the lowest. It seems that borrowing from Citizens Bank incurs the most expensive cost, while borrowing from National Commercial Bank is cheaper. The base rate of Citizens Bank is 10.55 percent, while the base rate of National Commercial Bank is 7.86 percent.

Even now, the industrialists are dissatisfied with the banks saying that the loan interest rates are high. Due to the complaints of the banks, the Ministry of Finance formed a committee to study the interest rate. However, the committee has also suggested that the interest rate should be determined on the basis of competition.

It seems that if the base rate of commercial banks is increased by 0.5 percent, the average will be 10.06 percent. It seems that the base rate of some banks is around 11 percent, while the base rate of most banks is in double digits. It is seen that the highest base rate will be of Citizens Bank while the lowest will be of National Commercial Bank. On this basis, the interest rate of commercial bank loans will also increase.