Despite bankers’ disagreement, the Bankers Association raises interest rates on deposits

Despite bankers’ disagreement, the Bankers Association raises interest rates on deposits

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KATHMANDU: The Nepal Bankers Association, an umbrella organization for commercial banks, has decided to raise interest rates from February 13.

The association’s working committee meeting held on Friday decided to raise the interest rate despite bankers’ concern about the impact of raising it.

The association has decided to increase the interest on the term deposit to 11.03% for individuals and 10.3% for institutions. Similarly, the association also decided to increase the savings account to 5% and to call at 3.015%.

After the meeting of the working committee, the association instructed its members to implement the decision accordingly. Banks will offer a 12% interest rate on remittance accounts. The interest rate on personal deposits was 10.03% last month.

The president of the bankers association, who is also the CEO of the Agriculture Development Bank, managed to decide to raise the interest rate saying that it was Governor Maha Prasad Adhikari who requested the increase.

Despite opposition from most CEOs, the union decided to raise interest rates. Previously, the Bankers Association held a plenary meeting to make such decisions. All CEOs were invited to the plenary meeting. Of the CEOs of all 27 banks, 18/20 bank CEOs would agree with a decision and it would be implemented. However, this time the CEOs were not informed of such an important decision.

In the meantime, bankers have urged the Bankers Association to reconsider its decision as it is likely to have a disastrous impact on the economy hit by the coronavirus pandemic.

Andrew B. Reiter