In the last year, commercial banks in Nepal have lowered their average base rate by a significant 2.04 percentage points, signaling a shift in the financial environment. While lower base rates generally mean cheaper loans for customers, there’s a surprising twist—borrowing demand remains sluggish.
What’s happening with the banks?
Despite being flush with investable funds, banks are seeing low credit demand. There’s more money available than ever, but not enough people or businesses looking to borrow. This mismatch has pushed banks to cut their deposit interest rates, which in turn lowers their base rate—the foundation for calculating loan interest.
As of Asar 2082, the average base rate across 20 commercial banks sits at 6.18%, down from 8.22% in Asar 2081.
Credit is picking up—but not fast enough
Recent stats from the Nepal Bankers’ Association show some signs of recovery. Between Shrawan and the end of Jestha in the current fiscal year 2081–82, total bank lending increased by 8.23%, reaching Rs. 49.47 trillion. Deposits also rose by 8.75%, totaling Rs. 62.58 trillion.
Still, experts warn this pace is far from what’s needed. Despite increased remittances and an improving balance of payments, the credit flow is crawling, not sprinting.
Which banks have the lowest and highest base rates?
Some banks are offering especially low base rates:
- Standard Chartered Bank: 4.90% (lowest among all)
- Rastriya Banijya Bank: 4.97%
- Five other banks are under the 6% mark.
On the other end, NIC Asia Bank leads with the highest base rate at 7.23%.
Why aren’t borrowers jumping in?
A few reasons:
- Many businesses are still recovering from past financial stress.
- Banks are facing a rise in non-performing loans, making them more cautious.
- Some borrowers remain uncertain about the future economy and hesitant to take on new debt.
Three-Month Average Base Rate Comparison (2081 Asar vs. 2082 Asar)
| Bank Name | Base Rate (2082 Asar) | Base Rate (2081 Asar) | Difference (in % points) |
|---|---|---|---|
| Standard Chartered Bank | 4.90% | 6.36% | -1.46% |
| Rastriya Banijya Bank | 4.97% | 6.96% | -1.99% |
| Everest Bank | 5.35% | 7.53% | -2.18% |
| Nepal Bank | 5.76% | 7.79% | -2.03% |
| Nepal Investment Mega Bank | 5.83% | 8.03% | -2.20% |
| Nabil Bank | 5.90% | 7.62% | -1.72% |
| Global IME Bank | 5.97% | 8.40% | -2.43% |
| Agricultural Development Bank | 6.03% | 8.38% | -2.35% |
| Sanima Bank | 6.26% | 8.20% | -1.94% |
| Machhapuchchhre Bank | 6.35% | 8.36% | -2.01% |
| Siddhartha Bank | 6.35% | 8.31% | -1.96% |
| NMB Bank | 6.36% | 7.98% | -1.62% |
| Nepal SBI Bank | 6.42% | 8.52% | -2.10% |
| Citizens Bank | 6.53% | 8.25% | -1.72% |
| Laxmi Sunrise Bank | 6.59% | 8.90% | -2.31% |
| Himalayan Bank | 6.63% | 9.12% | -2.49% |
| Prabhu Bank | 6.68% | 8.35% | -1.67% |
| Prime Commercial Bank | 6.73% | 9.04% | -2.31% |
| Kumari Bank | 6.74% | 9.18% | -2.44% |
| NIC Asia Bank | 7.23% | 9.47% | -2.24% |
| Overall Average | 6.18% | 8.22% | -2.04% |
