Nepal's Interest Rates Fall to Historic Low as BFIs Offer Loans at 5.53–7.30 Percent
Banks and financial institutions in Nepal are offering loans at average interest rates between 5.53 percent and 7.30 percent, the lowest on record, according to Nepal Rastra Bank. Persistent excess liquidity and weak loan demand are pressuring BFIs to keep rates low.
KATHMANDU, Sept 20 — Banks and financial institutions (BFIs) in Nepal are now offering loans at average interest rates ranging from 5.53 percent to 7.30 percent per annum, marking a historic low for the country's lending market.
According to records from Nepal Rastra Bank (NRB), the lowest average interest rate is on loans extended to the deprived sector, where rates have fallen to as low as 5.53 percent. This is followed by loans against shares as collateral, which carry an average interest rate of 6.36 percent.
Other key lending categories show similarly low rates:
- Real estate loans: average interest rate of 6.65 percent
- Residential loans up to Rs 20 million: average interest rate of 6.92 percent
- Auto loans: average interest rate of 6.99 percent
As loan interest rates continue to decline, borrowers can now obtain credit from BFIs at an average rate of less than 6.48 percent — the lowest rate till date, according to the NRB.
With excess liquidity persisting in the banking system and demand for loans remaining sluggish, BFIs are under mounting pressure to offer loans at low interest rates. Bankers caution that the actual interest rate payable by a customer may differ, mainly because the base rate, premium rate, nature of the loan, and customer risk assessment vary among the BFIs.