Kathmandu. The share of fixed deposits in total savings has decreased by about 15 percent from Ashad 2081 to January 2082. The share of fixed deposits in total savings has shrunk by 14.8 percentage points to 41.6 percent as of mid-January 2082 from 56.4 percent in mid-July 2081. As of mid-February, the total deposits had reached Rs 7.697 trillion.
This data shows that in the last few years, the trend of withdrawing money from fixed deposits and mobilizing other mechanisms has increased. As banks reduce the interest rate on fixed deposits, the share of deposits has also decreased. In recent years, banks have been reducing the interest rate on deposits which were in double digits. The interest rate on fixed deposits has been continuously declining.
As the interest rate on fixed deposits by banks has decreased, the attraction towards it has also decreased. According to the data of the Rastra Bank, the weighted average interest rate of deposits of commercial banks fell to 3.51 percent, development banks to 3.97 percent and finance companies to 5.01 percent in February 2002. In mid-July 2081, the interest rate was 5.77 percent, 6.63 percent for development banks and 7.93 percent for finance companies.
Former governor Dipendra Bahadur Chhetri said that savings are not attracted to fixed deposits due to the fall in interest rates of late. “If you don’t get interest by keeping money in the term, why keep it? This mentality is now on the savers due to the falling interest rates,” he said. ’
Chhetri said that the trend of withdrawing money from fixed deposits will increase even when inflation has increased in the market and it becomes difficult to manage expenses. “But that is not the case now,” he said, adding, “On the other hand, the habit of saving is increasing with the increase in deposits in the banking system.” ’
Bankers have also started saying that there is a need to attract investors towards simple savings rather than fixed deposits. Accordingly, they say that such a situation is being created by reducing the interest rate. As interest rates continue to fall, fixed deposits are also decreasing.
Now, the trend of investing in the stock market by withdrawing deposits from fixed accounts is increasing. Apart from this, savers have also started paying attention to other investment options. In recent times, with the ease of investment in the stock market, investors have seen that it is better to increase investment in fixed deposits rather than keeping money in fixed deposits.
Experts say that although the problem will arise if the fixed deposit decreases for a long time, it cannot be said that the problem will arise due to the current situation of the country. That is, they say that there will be no problem in withdrawing money from the fixed account when there is no suitable opportunity for investment at present.
The ratio of fixed deposits has decreased in recent times as fixed deposits are fixed for a fixed time period and although the interest rate on such account is comparatively high, the amount cannot be paid until the specified period expires.
Lately, savers have not been able to keep money in fixed deposits for more than a year. Bankers believe that institutional depositors keep their money in fixed deposits only for a period of one year.
Saving from fixed to simple savings
Chhetri says that due to the low interest rate on fixed deposits and it takes time to withdraw, savers are attracted to ordinary savings. The share of ordinary savings in total deposits has increased from 30.3 percent in July 2081 to 42.8 percent by January 2082. The share of ordinary savings in total savings increased by 12.5 percentage points from mid-July 2081 to mid-January 2082.
A few years ago, banks had attracted savers to fixed deposits by offering high interest rates of double digits due to the lack of money to invest in the banking system. With the high interest rates, the number of individuals and institutions keeping money in fixed deposits increased. As a result, the share of fixed deposits in total savings increased to 60 percent.
