“Gentleman’s Agreement” again lowers the interest rates; 6.5% on savings, 9.25% on individual FD and 8.5% on institutional FD

After a short competition for raising the interest rates, the banks have again come to a gentleman’s agreement to decrease the rates.

The banks have decided to lower the rates after hearing an earful from Governor Dr Chireenjivi Nepal, Deputy Governor Mr Chintamani Shiwakoti and Shivaraj Shrestha.

The decreased interest rates will be effective from today. It has been agreed that for the savings account maximum interest rate will stand at 6.5%. The minimum interest rate spread stands at 2% and interest for call deposit stands at 4.5%.

For individual fixed deposits, maximum 9.25% interest can be provided while for institutional FD, the interest rate stands at 8.5%. Increment of 0.5% in individual FD and 1% in institutional FD has been made possible. The payment of the interest should be made on a quarterly basis.

Similarly, Nepal Rastra Bank has also decided to waive the fine for one time of the banks whose CCD ratio has exceeded 80%.

Previously when the gentleman’s agreement was made, the interest rate was determined as 7% for deposits, 10.5% for individual FD and 10% for institutional FD. The agreement was not able to sustain for long and the banks again started raising the interest rates.

It should be seen till when the current gentleman’s agreement will work and how effective will it be.