By Ajay Chhetri, Kathmandu, Jan. 24: The interest rate of deposits and loans has been inching up over the current fiscal year (FY).

The Banking and Financial Statistics (BFS) of mid-December released by the Nepal Rastra Bank (NRB) recently showed that the interest rate on deposits increased by 1.48 percentage point while that of lending by 0.81 percentage points during the period from mid-August to mid-December.

The BFS revealed that the aggregate rise in interest on deposits has remained comparatively higher than the aggregate rise in the interest rate on the lending.

The aggregate interest on deposit rose to 6.24 percent in mid-December up from 4.76 per cent recorded in mid-August. Similarly, the aggregate interest on lending rose to 9.29 per cent in mid-December from 8.48 per cent in mid-August.

Among the interests rate on deposits, the weighted average (Wt.avg.) interest rate on savings rose to 5.17 per cent in mid-December up from 2.92 per cent recorded in mid-August. The Wt.avg. the interest rate on fixed deposits rose to 8.61 per cent in mid-December from 7.77 per cent recorded in mid-August. The Wt.avg. interest rate on call deposit in mid-December rose to 1.43 per cent up from 0.94 per cent in mid-August.

Among the interests on loan, Wt.avg interest rate on the term loan rose to 8.77 per cent in mid-December from 8.19 per cent in mid-August. The Wt.avg. interest on overdraft loan rose to 9.58 per cent in mid-December from 8.79 per cent in mid-August.

The Wt.avg. interest on imports loan rose to 8.08 per cent in mid-December from 7.11 per cent recorded in mid-August. The Wt.avg. interest on the working capital loan rose to 9.33 per cent in mid-December from 8.33 per cent recorded in mid-August.

The Wt.avg. interest on residential home loans rose to 9.69 per cent in mid-December from 9.24 per cent in mid-August. The Wt.avg. interest on real estate loans rose to 9.63 per cent in mid-December from 9.04 per cent recorded in mid-August. The Wt.avg interest on margin nature loan rose to 9.12 per cent in mid-December from 8.14 per cent in mid-December. The Wt.avg interest on home hire purchased loan rose to 10.11 per cent in mid-December from 9.70 per cent recorded in mid-August.

The Wt.avg interest on the deprived sector loan also rose by 0.86 percentage point during the period from mid-December to mid-August. The Wt.avg interest rose to 8.23 per cent in mid-December from 7.37 per cent recorded in mid-August.

In response to a higher rise in interest on deposits than the interest on lending, deputy spokesperson of the Nepal Rastra Bank, Narayan Prasad Pokhrel, said the prevalence of stress in the availability of liquidity in the BFIs is one main reason. He said that BFI, therefore, needed to raise the interest on the deposit to rise the source of the fund. He said that excess liquidity remained Rs. 9 billion on January 23. He also made it a point that the government has been mobilizing domestic debt to ease the liquidity in the economy.