Kathmandu. National Commercial Bank's interest rate on share mortgage loans is the cheapest in the banking sector. Similarly, Nepal Bank said that it provides share loans at a minimum interest rate of 11.94 percent. The bank calculates a premium rate of 2.5 percent to 5 percent on the base rate of 9.44 percent for share loans. Banks, which have not been able to provide share loans for a long time, have increased the amount of share loans in July. 

Banks and financial institutions are disbursing loans by reducing the interest on equity loans as compared to previous months. In July of the current financial year, banks have provided loans of 58 billion 90 million rupees to investors. Which is around November of the last financial year.

Banks' equity loans have increased by 4 billion compared to last June. In June, commercial banks provided 54 billion 698 million rupees in equity loans, while in August they invested 57 billion 814 million rupees in loans. The current loan investment is the highest in the last 10 months.

With the increase in loan investment of banks, the interest rate has also decreased. In July of the current financial year, banks provided share loans at an average interest rate of 12.97 percent. Which is around July of the last financial year. In July of last financial year, commercial banks invested 61 billion 563 million rupees in equity loans at 12.89 percent interest. Until last May, the interest rate on share mortgage loans, which was around 14 percent on average, remained at around 13 percent in May and June. However, in July, the interest decreased to 12 percent.

According to the banker, the demand for large amount of share mortgage loans has started increasing recently. A banker said that after the National Bank reduced the risk weight of share mortgage loans up to 5 million from 150 percent to 100 percent, the demand for share mortgage loans increased.

As the banks have reduced the interest on equity loans, the cost of the investors has also decreased. Investors who paid 14.45 percent interest in last Baisakh paid 12.97 percent interest in July and the cost decreased by 10.24 percent.

Banks determine the loan interest rate by adding a premium to the base rate. The bank loan interest rate is cheaper for those whose base rate and premium rate are low. According to the statistics of the banks, the lowest interest rate on share loans is of the National Commercial Bank. National Commercial Bank has been giving share loans at a minimum of 11.27 percent.

Nabil Bank has been aggressive in investing in share loans. In July, Nabil Bank has invested 9 billion 683 million rupees in equity loan. Which is 16.43 percent of the total equity loans of the banking sector. Nabil alone has disbursed more loans than half a dozen banks have invested.

Similarly, in the second, Global IME Bank has provided loans. The bank has provided equity loan of 6 billion 289 million rupees. Nepal Bank is the third largest investor in equity loans, while National Commercial Bank is the fourth.