NRB instruct banks to maintain a fixed interest rate

By Our Reporter 

The Nepal Rastra Bank has directed the banks and financial institutions (BFIs) to maintain a fixed interest rate for the loans that have at least one year or more repayment period.

Amending its Unified Directives 2019, the central bank has asked the banks to maintain stable interest rates in the mobilisation of credit for more than a year’s period. However, they can opt for the adjustable interest rate if the client wishes so.

This provision applies to all individual loans, including home loan/housing loan, auto/vehicle loan and hire-purchase loan, given with more than a year’s repayment period, that have monthly or other periodic repay provisions.

According to the NRB, the changes in the terms of loan, repayment schedule or instalment amount should not be considered rescheduling or restructuring. The fixed interest rate should be set and published on a half-yearly basis.

However, the banks can change the interest rate in the deposits. They can change it a month in advance.

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