December 20, 2018 | Investopaper
There is turbulence in the banking community about the current interest war. Nabil and Himalayan bank published the notice to provide up to 13.5% interest rate on individual fixed deposits. The entrance of big banks on increasing the interest rate has erupted serious concerns. The ongoing interest war among banks has pushed the development banks to issue an ultimatum. The development bankers association challenged the banks to reduce the interest rate till Sunday. If the banks are unable to reach consensus to reduce the ongoing interest war, then development banks will increase the interest rate to 14% on deposits.
Some of the banks have already increased the interest to 12% an above. The interest war among banks is expected to continue unless the banks reach the mutual consensus. The credit crunch that is going now on for several months has forced the banks to increase the deposits by pulling from other banks. The development banks are afraid that their deposits will be pulled out if they do not increase the interest rate.