NBA discards interest rate cartel; banks free to fix rates on their own

KATHMANDU: The Nepal Bankers Association (NBA) has decided to discontinue the ‘interest rate cartel’.

A meeting of the CEOs and representatives of 20 commercial banks held on Thursday agreed to put an end to the cartel that was being enforced under the guise of a ‘gentleman’s understanding’.

Furthermore, the NBA has also decided to allow commercial banks to independently determine their own interest rates.

This decision grants commercial banks the authority to set the rates for the first month of the new fiscal year, commencing from July 16. They are now free to choose whether to increase, decrease, or maintain the rates unchanged.

The banks are facing pressure to lower interest rates as they currently hold around Rs 400 billion of loanable funds. However, the demand for credit remains low due to the high lending rates.