{"id":2160,"date":"2026-06-18T09:44:57","date_gmt":"2026-06-18T09:44:57","guid":{"rendered":"https:\/\/english.bankingkhabar.com\/?p=2160"},"modified":"2026-06-18T09:48:08","modified_gmt":"2026-06-18T09:48:08","slug":"rising-remittances-and-fewer-investment-options-boost-bank-deposits","status":"publish","type":"post","link":"https:\/\/english.bankingkhabar.com\/?p=2160","title":{"rendered":"Rising Remittances and Fewer Investment Options Boost Bank Deposits"},"content":{"rendered":"

\"\"<\/a>Banking Khabar \/<\/strong> Over the past year, banks and financial institutions in Nepal have been steadily reducing the interest rates offered on deposits. Normally, a decline in deposit rates is expected to reduce the attraction among depositors and lead to a fall in savings held by banks. However, Nepal\u2019s banking sector has witnessed a different trend.<\/p>\n

Despite declining interest rates, deposits in the banking system have continued to grow, while public participation in formal banking remains strong. According to data from Nepal Rastra Bank, total deposits collected by banks and financial institutions have increased significantly over the last year.<\/p>\n

The rise in deposits, despite sluggish economic activity, has been attributed to several factors, including increased remittance inflows, growing preference for secure investment options, and limited alternative investment opportunities. With fewer attractive avenues available for investment, individuals and businesses have continued to keep their money in banks.<\/p>\n

Falling Interest Rates Changing Deposit Patterns<\/strong><\/h2>\n

Although the overall volume of deposits has increased, the structure of deposits has started changing following the decline in interest rates.<\/p>\n

Fixed deposits, which were considered attractive during periods of higher interest rates, have seen some decline in their share. Meanwhile, the trend of keeping money in savings accounts has increased.<\/p>\n

Many depositors have started prioritizing liquidity over higher returns, preferring savings accounts where funds can be withdrawn whenever needed rather than locking money away for longer periods in fixed deposits. This indicates that while deposit levels remain strong, the nature of deposits is gradually shifting.<\/p>\n

Banks Further Reduce Deposit Rates in Ashadh<\/span><\/strong><\/h2>\n

Banks have announced new interest rates for the month of Ashadh. Some commercial banks have reduced fixed deposit rates for both individual and institutional depositors.<\/p>\n

According to the latest rates, the average interest rate on individual fixed deposits of 20 commercial banks stands at 4.27 percent, compared to 4.34 percent in Jestha. Similarly, the average interest rate for institutional fixed deposits has been set at 3.18 percent, down slightly from 3.20 percent in the previous month.<\/p>\n

For Ashadh, seven banks have reduced their deposit rates, while 13 banks have maintained the same rates as Jestha.<\/p>\n

Among banks reducing rates, Kumari Bank Limited has set the individual fixed deposit rate at 3.91 percent. Standard Chartered Bank Nepal has fixed the rate at 3.95 percent, while Laxmi Sunrise Bank, Prime Commercial Bank, Himalayan Bank, and NIC Asia Bank have set it at 4 percent.<\/p>\n

Similarly, NMB Bank and Rastriya Banijya Bank have maintained a 4.75 percent rate for individual fixed deposits. Nabil Bank and Prabhu Bank have set the rate at 4.55 percent, while Global IME Bank, Machhapuchchhre Bank, Sanima Bank, and Nepal Investment Mega Bank have fixed it at 4.50 percent.<\/p>\n

Other banks have set individual fixed deposit rates ranging from 4.05 percent to 4.25 percent.<\/p>\n

At a time when deposit rates are declining, credit expansion has remained weak, creating challenges for banks in utilizing available funds.<\/p>\n

Deposit Growth Outpacing Credit Expansion<\/strong><\/h2>\n

Although deposits have increased significantly over the past year, loan expansion has remained relatively slow.<\/p>\n

Weak economic activities in sectors such as industry, trade, and construction have limited demand for new loans. As deposits continue to grow faster than lending, excess liquidity has accumulated in the banking system.<\/p>\n

This situation has encouraged banks to further reduce deposit interest rates, as they no longer need to offer high returns to attract additional funds.<\/p>\n

Bankers say that when liquidity is sufficient, maintaining higher deposit rates becomes unnecessary, putting continuous pressure on deposit returns.<\/p>\n

Remittance: The Main Driver Behind Deposit Growth<\/strong><\/h2>\n

The steady growth of remittances has emerged as one of the major factors supporting deposit expansion in Nepal\u2019s banking system.<\/p>\n

Money sent home by Nepalis working abroad has continued to rise, and a significant portion of these funds is being deposited into banks. This has provided a strong foundation for increasing deposits.<\/p>\n

At the same time, the rapid expansion of digital banking, mobile banking, and QR-based payments has encouraged more people to open bank accounts and participate in the formal financial system.<\/p>\n

Available data suggests that depositor confidence in banks has not weakened. Instead, continuous growth in total deposits, expansion of personal deposits, and increasing preference for savings accounts indicate that public trust in the banking system remains intact.<\/p>\n

Safety and Liquidity Remain Key Priorities for Depositors<\/strong><\/h2>\n

Overall, the trend of the past year shows that falling interest rates have not pushed depositors away from banks. Financial institutions continue to remain the preferred destination for savings due to their security and reliability.<\/p>\n

Although increased activity in alternative investment sectors could influence deposit trends in the future, Nepal\u2019s banking system is likely to maintain deposit growth in the near term.<\/p>\n

Banking experts say depositors have gradually shifted their focus from returns to liquidity. As a result, savings accounts are becoming increasingly popular, reflecting a changing preference among customers in a low-interest-rate environment.<\/p>\n","protected":false},"excerpt":{"rendered":"

Banking Khabar \/ Over the past year, banks and financial institutions in Nepal have been steadily reducing the interest rates offered on deposits. Normally, a decline in deposit rates is expected to reduce the attraction among depositors and lead to a fall in savings held by banks. However, Nepal\u2019s banking sector has witnessed a different […]<\/p>\n","protected":false},"author":1,"featured_media":2161,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-2160","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner"],"yoast_head":"\nRising Remittances and Fewer Investment Options Boost Bank Deposits - Bankingkhabar<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/english.bankingkhabar.com\/?p=2160\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Rising Remittances and Fewer Investment Options Boost Bank Deposits - Bankingkhabar\" \/>\n<meta property=\"og:description\" content=\"Banking Khabar \/ Over the past year, banks and financial institutions in Nepal have been steadily reducing the interest rates offered on deposits. 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