Due to the economic shutdown caused by COVID-19, the loan interest rate of the bank has fallen down drastically. As the economy is yet to be recovered, there is a possibility of further decline in the loan interest rates.
Average Base Rate 7.7 percent
In the first quarter of the current FY, 27 commercial banks have an average base rate of 7.7 percent. In the previous quarter, the base rate was 8.5 percent. In between the quarter, the base rate decreased by 0.8 percent.
The loan interest rate of the banks with a high base rate is comparably high. The base rate of state-owned Rastriya Banijya Bank has the lowest base rate of 5.7 percent while Civil Bank has the highest base rate of 8.9 percent.
Spread Rate 4.33 percent
In the first quarter of the current FY, the average spread rate of commercial banks is at 4.33 percent. As per NRB, the banks must maintain below 4.4 percent spread rate.
While most of the banks have maintained the required spread rate, few have kept it below the requirement. Moreover, three banks have above the NRB limit.
In the review period of the last FY, the average spread rate of the banks was 4.99 percent which declined to 3.99 percent by the end of the year. However, the rate increased to 4.33 percent in the first quarter of the current FY.
By the end of the first quarter, Sanima Bank has the lowest spread rate of 3.61 percent.