Banks start to decrease the interest rates; Abundance of funds leads to the decrease in the rates; Will the stock market rise owing to this?

The last fiscal year was all about the race between the commercial banks to increase the interest rates. However, from the beginning of this fiscal year, the story seems to have taken another turn.

Many banks and financial institutions have revised their interest rates and the new interest rates are comparatively lower than the previous interest rates provided by the bank. The interest rates on savings of most of the banks have already decreased.

Now the banks have also started to decrease their interest rates on the fixed deposits as well. Recently Nabil Bank has published its new interest rate of 8% on the fixed deposit. The same bank was in the competition to increase the interest rate in all of its provided schemes. Till yesterday, the bank was aggressively promoting its 10.5% one year FD.

The main reason behind this might be the abundance of lendable funds in the banks. The banks might continue to decrease their interest rates till Bhadra and after that it will upon the condition of the liquidity. All the new loans will be offered at base rate or very less premium on the base rate.

The stock market was also highly affected by the high interest rates provided by the banks. Many investors, brokers as well as experts had said that the one of the reason behind the fall of stock market was also due to the high interest rates. But as the interest rates have started to decline, will stock market be able to enjoy boom? The question will be answered soon.

Also See:

• NIC Asia slashes savings interest rate to 5% on all schemes except one; Fixed deposits rate also reduced to 10.50%
• Latest Interest Rate change announcements