Kathmandu. The interest rate will decrease in the coming month of July. The interest rates of banks and financial institutions will be reduced in the coming mid July 2023 (Sharwan 2080). Banks have prepared to reduce the interest rate of deposits and loans with effect from the first month of the current financial year. Lately, more liquidity has accumulated in the banking system. However, the loan is not being disbursed. In view of the same situation, the chief executive officer (CEO) of a bank said that the interest rate of deposits and loans will decrease in mid July.

He said that "There is a lot of liquidity in the banking system, Now the interest rate should be reduced.  According to him, the deposit interest rate will decrease by 1 percent in July. The Nepal Bankers Association should officially decide the interest rate. A meeting of the association is being held this Friday (June 29) to determine the interest rate for the coming month of July. The same meeting will determine the interest rate based on the current situation.

In the month of June, banks and financial institutions set interest rates of 1.99 percent for individual term deposits and 7.999 percent for institutional term deposits. Similarly, the interest rate on savings accounts has been fixed from 5.4 percent to 7.4 percent. Banks also reduced the interest rate of loans for that month. Banks reduced the loan interest rate from zero.2 percent to zero.24 percent based on the base rate.

Recently, the investable capital in the banking system has increased rapidly. Deposits in the banking system increased by 20 billion rupees in one day. According to Rashtra Bank, deposits of banks and financial institutions have increased to 57 trillion 15 billion rupees by Sunday. Deposits in commercial banks alone have reached 50 trillion rupees. Now the banks are in a position to invest more than 5 billion in loans. As the liquidity in banks is getting easier, the interest rate of inter-bank transactions is also continuously decreasing. Currently, the inter-bank interest rate has dropped to 1.36 percent. Especially after the increase in deposits in the banking system, this interest rate is reduced.

Now the demand for goods and services in the market has decreased. The purchasing power of consumers has also decreased. The real estate business is also not encouraging. Moreover, the interest rate of bank loans is also high. In this situation, it is not possible to take a loan from the bank at an expensive rate, to do business, to buy and sell real estate. The CEO of a bank said that for the same reason, there is no demand for loans in banks.