Commercial banks have once again lowered deposit interest rates for the month of mid-December to mid-January, extending a downward trend that has continued for several months amid weak credit demand and sluggish economic activities in the country. According to interest rates for the new months published by banks, most commercial and development banks have reduced the maximum interest rate on individual fixed deposits. Only a few have chosen to keep rates unchanged. 

The latest revisions reflect excess liquidity in the banking system and limited lending opportunities as private sector investment remains subdued. Thirteen out of 20 commercial banks in the country have reduced their maximum interest rate on individual fixed deposits for Poush, while seven banks have continued their rates of Mangsir. 

Prime Commercial Bank, Rastriya Banijya Bank and Global IME Bank have reduced their rates by 0.5 percentage points each, while Prabhu and Agricultural Development Bank have lowered their rates by 0.4 percentage points each, and Kumari Bank by 0.38 percentage points. Seven commercial banks have kept their interest rates unchanged. They include Citizens International, Machhapuchhre, NIC Asia, Siddharttha, Nepal Investment Mega, NMB and Himalaya Bank. 

With the fresh revision, Global IME and Himalaya are offering the highest individual fixed deposit interest rates of 5.5 percent each, while the lowest is 4.25 percent offered by Prime Commercial Bank. With this, the average maximum interest rate on individual fixed deposits have dropped to 4.834 percent from 5.0405 percent in the previous month. The average maximum interest rate on institutional fixed deposits have also come down by 0.13 percentage points in Poush.

A similar trend is visible among national-level development banks.Muktinath, Lumbini, Kamana Sewa, Shangrila and Garima Development Banks have reduced their rates for Poush. With the revision, Muktinath and Lumbini are offering a maximum interest rate of 5.5 percent on individual fixed deposits, while Kamana Sewa, Shangrila and Garima have fixed rates at 5.55 percent. Mahalaxmi Development Bank has kept the rate unchanged at 5.8 percent.

Bankers say interest rates are likely to remain under pressure as long as credit growth stays weak. Despite ample liquidity, banks have struggled to expand lending due to low demand for loans, reflecting broader economic slowdown and delayed investment decisions.