Thursday, April 10, 2008

Rates looks up

The days of low interest rates are soon going to be things of past as some of the banks have started increasing their interest rates.
Though the interest rates offered by some of the leading banks is as low as two per cent, cut-throat competition between the banks has forced them to hike interest rates.
"The older banks continue to give low interest rates between two and three per cent," Kishore Maharjan, CEO of Sunrise Bank Ltd said, adding that the new banks are giving better rates.
"Sunrise Bank offers the highest rate on the savings deposit at 6.5 per cent that exceeds the inflation rate of six per cent," he adds.
The latest entrants in the banking sector like Global Bank, Citizen International Bank and Prime Bank come next in terms of offering comparatively high interest rates at present.
"Banks increase interest rates on lending to compensate for increased interest rates on deposits. Interest rates on deposits jumped substantially due to liquidity crunch, result of capital flight and absorption of fund by the government," Maharjan said.
Small accountholders will largely benefit, if increasing of interest rates will be a successful mantra for Nepali banks in the days ahead.
Since there are few deposit strong corporate institutions, they had field day hiking up their interest rate as high as 8.5 per cent for one year fixed deposit.
Spread is also higher in Nepal because of low deposit rates. "The lending rates of Nepali banks are much lower in comparison to India or Pakistan," he added.
"Because of several repos and selling of over $24 million has solved the liquidity crunch temporarily," Maharjan said, adding that when government absorbs both ADBN and NT’s share money next month, there could be some crunch again.
The share money of NT’s share is in the banking system unlike the ADBN’s share money that is blocked at a place.
Customers can open an account at very low balance or even at zero balance also, at present. A customer can open an account at Sunrise with Rs 1,000. Sunrise Bank is also providing accident and disability insurance services for free.

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