Kathmandu: The base rate of all 20 commercial banks in Nepal has declined, bringing down loan interest rates. In Falgun, the average base rate of commercial banks dropped by 0.19 percentage points, reaching 6.61%, compared to 6.8% in Magh.

Banks have been consistently reducing deposit interest rates for months, as excess liquidity has piled up in the banking system. This decrease in deposit rates has, in turn, lowered banks’ costs, leading to a reduction in base rates. Currently, some banks have brought their base rates down to as low as 5%.

Among the commercial banks, Standard Chartered Bank now has the lowest base rate at 5.11%, followed by Rastriya Banijya Bank at 5.44% and Everest Bank at 5.63%.

A continuous drop in base rates has made loans more affordable. Since base rates directly influence interest rates on loans, a decrease in base rates results in lower borrowing costs. As of now, all 20 commercial banks are in a position to offer loans at single-digit interest rates, meaning below 10%. Depending on the nature of the loan, banks generally add a 1% to 5% premium over the base rate, varying across banks and loan types.

Banks such as Nepal Bank, Nabil Bank, Agriculture Development Bank, Nepal Investment Mega Bank, Global IME, Sanima Bank, NMB Bank, Siddhartha Bank, and Nepal SBI are also capable of providing loans at single-digit interest rates.

Currently, over Rs. 700 billion of investable funds are sitting idle in the banking system due to higher deposits and lower credit demand. The sluggish economy has failed to stimulate borrowing. To counter this, banks have introduced various loan offers, with some even willing to provide loans at base rates—especially for real estate financing. Additionally, banks are now offering single-digit interest rates for loans in sectors beyond real estate, making borrowing more affordable across different industries.