Banks interest rate on deposits in Nepal by the National Bank

Nov Mon 2023 03:59:20

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Banks interest rate on deposits in Nepal by the National Bank

Kathmandu. Nepal Rastra Bank has issued some regulations regarding interest rates. It is mentioned in the book on arrangements made by Nepal Rastra Bank for financial customer protection.

These are the arrangements related to interest rates

(a) The average difference between the interest rates given by banks and financial institutions on deposits and on loans and mortgages has been determined not to exceed 4.0 percent in the case of "A" class commercial banks and 4.6 percent in the case of "B" and "C" class institutions from the month of June 2080. .

(b) There is a provision that the information regarding the applicable interest rate for the next month should be published before the beginning of the Nepali month.

(c) When determining the interest rate of loans and mortgages, it should be linked to the 'base rate'. The premium rate added to the base rate should be clearly mentioned in the loan proposal letter. While fixing the premium rate, it cannot be set higher than the published premium rate at the time of receiving the loan application. After determining the premium rate and mentioning it in the proposal letter, after granting the loan, the premium rate cannot be increased or any kind of discount can be given and the scheme will automatically increase again.

(d) Fixed interest rate should be maintained so that the interest rate of personal periodic loans with repayment period of more than one year does not change. The interest rate can be revised for the first time in seven years and thereafter every five years with the written agreement of the fixed interest rate borrower. However, if the customer himself wants to take a loan at a variable interest rate, which changes when the base rate of the licensed institution changes, the detailed booklet on the arrangements made by Nepal Rastra Bank for financial customer protection, the variable interest rate must be maintained at the customer's request. Apart from this, the interest of such loans cannot be changed for any other reason.

(e) When providing loans on the security of fixed deposit receipts, there is a provision that the interest rate charged on such loans should be informed to the concerned customer at the time of opening the fixed deposit account and his written consent should be obtained.

(f) If there is an increase in the interest rate on the loan given to the person buying or building a house for the first time, there is a provision that the loan will be paid without increasing the pre-determined monthly installments.

(G) There is a provision that the loan granted to the project which has started to export electricity after construction of the power project shall be extended for five years after the export and the loan granted to the hydroelectric power project with reservoirs shall be provided with an addition of only one percentage point to the base rate throughout the loan period.

(h) There is provision to provide loan at base rate if loan is requested for the purpose of establishing liquid oxygen plant or oxygen plant to health service provider organizations, hospitals or industries which are currently operating.

(i) If a loan is requested for the purpose of establishing a vaccine production industry recognized by the Government of Nepal for the treatment of epidemic diseases, banks and financial institutions should evaluate the business plan and provide loans at the base rate.

(j) There is a provision that banks and financial institutions can extend a loan of up to Rs.200 million by adding a maximum of two percentage points to the base rate for establishing a hospital with up to 100 beds at the local level that does not have a hospital.

(k) Licensee shall pay Rs. Loans for food production, livestock, fisheries, export industries, manufacturing industries based on 100% indigenous raw materials, handicrafts and skill-based businesses and enterprise businesses (except for import-related businesses) up to 20 million rupees should be added to the base rate by adding up to two percent of the loan interest.

(l) For the production of fruits and herbs and/or completely: For the project of processing fruits and herbs produced in the country, banks and financial institutions will have to provide periodical loans by adding a maximum of two percentage points to the base rate.

(d) There is a provision to determine the interest rate by adding a maximum of two percentage points to the base rate while providing loans to the private sector for the construction of information technology parks and industrial parks. Information booklet regarding arrangements made by Nepal Rastra Bank for financial customer protection Regarding arrangements made by Nepal Rastra Bank for financial customer protection

(d) Banks and financial institutions have to determine the interest rate by adding a premium of up to two percentage points to the base rate when providing wholesale loans to the microfinance financial institutions under the poor class loans.

(n) Banks and financial institutions should pay Rs. When disbursing loans of up to five crores, there is a provision that loans can be disbursed on the project's collateral based on the feasibility, and if there is any complaint in this regard, the concerned financial customer can make a complaint to this bank by opening a clear account.