August 9: Commercial banks have lowered the spread rate for deposits and loans as per the instructions of Nepal Rastra Bank (NRB).

Amid criticism that the banks were making maximum profit, the central bank announced the reduction of the spread rate through the first quarterly review of the monetary policy of the last fiscal year (FY). The NRB also issued instructions to the banks to implement the decision. As per the instructions, the banks have maintained the spread rate within the prescribed limits.

According to the financial statements published by the banks, 12 out of the 20 commercial banks reduced the spread rate to less than 4 percent in mid-June to mid-July of last fiscal year (FY 2022/23). The central bank had instructed the commercial banks to reduce the spread rate from 4.4 percent to 4 percent.

Issuing a circular in early December last year, the NRB had instructed commercial banks to maintain the spread rate at 4.2 percent from mid-March and 4 percent from mid-June this year.

The banks that opted for merger or acquisition were given exemption even if the spread rate limit exceeded by 1 percentage point until mid-July.

According to the financial statements of the banks, the spread rate of Citizens Bank, Sanima Bank and Standard Chartered Bank remains at 4 percent. Similarly, the lowest percentage of spread rate is maintained by the Agricultural Development Bank at 3.94 percent.

The spread rate of Nepal Investment Mega Bank, Kumari Bank, Global IME Bank, Prabhu Bank, Himalayan Bank and Laxmi Sunrise Bank, which merged in the previous year, along with Nabil Bank, which acquired Nepal Bangladesh Bank in the previous fiscal year, is more than 4 percent. As the concession given to these banks is now over, they have to bring the spread rate within 4 percent by mid-October.