Commercial banks in Nepal have reduced interest rates on savings and fixed deposits for the month of Ashadh (mid-June to mid-July). According to the newly published rate tables, most banks have lowered their deposit interest rates compared to the previous month of Jestha.

1. Savings Deposit Rates

The interest on savings deposits ranges from 3.00% to 5.00%.
Machhapuchchhre Bank offers the highest savings rate at 5.00%, while Asian Bank provides the lowest (3.00–3.05%).
Most banks offer below 4%, meaning short-term depositors will earn less compared to previous months.

2. Personal Fixed Deposit (1-year term)

Highest Rate: 5.75% (Prime Commercial Bank)
Lowest Rate: 3.00% (MCC Bank)
The average 1-year FD rate across most banks ranges from 4.25% to 5.50%, suggesting that long-term depositors can still expect moderate returns.

3. Institutional Fixed Deposits

Most banks offer rates between 3.00% and 4.50% for institutional clients.
NIC Asia Bank offers one of the highest institutional rates (3.04%–4.95%).

4. Banks That Maintained Rates

Nabil Bank, Prabhu Bank, and Himalayan Bank have kept their rates unchanged from the previous month, indicating balanced liquidity or strategic stability.

Reasons for Rate Reduction:

1. End-of-Year Government Spending

As the fiscal year comes to a close, government agencies start clearing dues and making large payments, injecting substantial liquidity into the banking system. The month of Ashadh typically sees this spike.

2. High Remittance Inflow

Nepal Rastra Bank reported a historic high in remittance inflows during the month of Baisakh.

Currently, the banking system holds around NPR 450 billion in excess liquidity.

3. Liquidity Management Strategy

With surplus funds in the system, banks are reducing rates to control inflows and avoid unnecessary interest expenses. Lower deposit rates help banks manage surplus funds without increasing liabilities.

The overall trend of rate cuts reflects banks' efforts to manage excess liquidity amid high government spending and remittance inflows. For savers, this means lower returns, potentially pushing them to explore alternative investment options.

However, from a macroeconomic standpoint, reduced interest rates may affect credit flow, deposit momentum, and monetary stability if prolonged. Close monitoring by Nepal Rastra Bank will be essential to ensure financial balance.