As per the auction chart published by NRB, the government will borrow the internal loan at 12.5 percent interest for the fourth quarter.
Amid the liquidity crisis in the financial sector, the government is paying more interest rate in internal loan which will surely increase its interest expenditure.
On the contrary, the bank had borrowed internal loan in cheap interest rate in the last FY when there was excess liquidity, however, this year due to liquidity crisis, the government is paying more interest as the interest rate in banking sector is also increasing.
The central bank is providing 12.5 percent interest to the five yearly foreign saving bond issued to the Nepalese working in foreign land scheduled to be issued on coming Asar.
As per the NRB data, the interest rate for such bond has not exceeded 10.50 percent since the FY 2067/68.
Similarly, the central bank is providing 11 percent interest to citizens saving bond issued to the general public. The bank will issue five yearly saving bonds worth Rs 3 billion in the fourth quarter.
NRB started issuing citizen saving bond since FY 2057/59 to maximize mobilization of internal savings of non-banking sectors.
In the last FY, the bank provided 9 percent interest to citizen saving bonds and 10 percent to foreign saving bonds.
Right now, the commercial banks are providing 11.03 percent in fixed deposit. In remittance account, they provided extra one percent equally 12.03 percent interest. As the banks are raising interest rate of deposits, the government also raised the interest rate provided to the saving bonds.
