Summary：Interest rates plunge as excess liquidity surges past Rs 1.4 trillion **Introduction** Kathmandu,

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Interest rates plunge as excess liquidity surges past Rs 1.4 trillion

**Introduction**
Kathmandu, July 17 – Nepal’s banking sector is feeling the squeeze of too much cash chasing too few borrowers. With excess liquidity now topping Rs 1.4 trillion, commercial banks have started cutting deposit rates for Shrawan, the opening month of the fiscal year. The move reflects a broader trend where abundant reserves meet tepid loan demand, pushing lenders to rethink the cost of attracting savers.

**Key Developments**
Data from Nepal Rastra Bank shows that the average savings‑rate offered by major banks slipped by 15‑20 basis points this week, while fixed‑deposit yields fell even sharper. Institutions such as Nabil Bank, Himalayan Bank and Everest Bank announced the revisions in their circulars, citing “prevailing liquidity conditions” as the primary driver. Simultaneously, the credit‑to‑deposit ratio hovered around 78 %, well below the central bank’s comfort zone of 85‑90 %, underscoring weak appetite for new loans among businesses and households.

**Industry Analysis**
The surplus stems from a