The days of cheaper auto,
housing, personal and other
loans are, sadly, over.
Those who are planning to
borrow and who have already
borrowed must stand ready to
fork out more money and
readjust their financial
planning. The average
lending rate in the banking
sector has edged up by 1 to
2 percent, while interest
rates on fixed deposits have
gone up by 1 to 3 percent,
said Radhesh Pant, president
of Nepal Bankers'
Association.
Nabil bank
has
already raised the lending
rate in consumer financing
to 8 percent, up from 6.5
percent. Anil Shah, chief
executive officer at Nabil
said, "To collect savings to
match the rising demand for
money, we have begun
offering 6.5 to 7 percent
interest rates on fixed
deposits of six months and
above." It was 3 to 3.5
percent earlier. While the
bank has revised fixed
deposit rates upward, Shah
said it will increase rates
in other types of deposits
gradually. Borrowers have
begun to feel the pinch. Sashi Tulachan, a resident
of Tikhediwal, was arranging
money to pay the first
installment on an auto loan
when she was notified that
her installment has risen
because of recent upward
movement in the lending
rate. "To my surprise and
dismay, I received a
document from Nabil Bank,
asking me to sign a new
contractual agreement which
raises my lending rate to
7.5 percent," she said. "I
had just recently bought a
vehicle with loan at 6
percent interest." She said
she felt unhappy, but signed
the agreement as she did not
have any other option.
"Working people like me have
to prepare financial
planning in advance. Any
abrupt change will impact my
budget," she said. The
revision in interest rates
is due to the growing
liquidity crunch in the
banking sector. Discount
rate on 91-day treasury
bills (T-bills) reached 6.16
percent at Monday's auction.
It was just 2 percent last
September. Another strong
indicator of stretched
liquidity is the rising
inter-bank lending rate,
which is hovering over 8
percent, up from 3.5 percent
in mid-July. Pant said the
liquidity shortage will
accelerate as
Nepal Telecom
and
Nepal Electricity are
issuing shares and bonds
while
Nepal Oil Corporation
is also in the process of
doing likewise, to raise
over 14 billion rupees. "The
days for cheap loans
are certainly over," he
said.
Read
more about the loan rates in
Nepal
Other banking news and
articles:
NIC
banks in Lahan (14-6-2008)
NBL
starts e-banking (10-6-2008)
Profit
of Global Bank (1-2-2008)
Job
hopping in bank sector of
Nepal (4-2-2008)
Neelgiri Development Bank
collected a deposit of Rs
45.7 million (21-1-2008)
Sanima
introduces debit card
(1-1-2008)
Sunrise bank launches
saving scheme (1-1-2008)
Banepa, city of banks
(16-12-2007)
Garima Development Bank
Limited opens in Waling
Bazaar (24-11-2007)
Nepal bank back on track
(16-11-2007)
Nabil
Bank inaugurates nine
new branches
(13-11-2007)
Citizens Bank International
kicks off commercial
operation (21-4-2007)
Nepal Stock Exchange
suspends trading of
Nepal Credit and
Commerce Bank
(30-1-2007)
Buddha on bank notes
(25-1-2007)
Rastriya
Banijya Bank
privatisation (23-1-2007)
agricultural development
bank loans (24-1-07)
recovery plan for bad
loans (1-1-07)
|