Jiwan Bimak Sangh Urges NRB to Reconsider Over Interest Rate Cap

Kathmandu: Jiwan Bimak Sangh Nepal has formally urged the Governor of Nepal Rastra Bank, central bank, to reconsider about the new cap for saving interest rates offered to the institutional investors.

A team of Sangh including President Nirmal Kaji Shrestha, Vice President Poshakraj Paudel, General Secretary Rajkumar Aryal and Treasurer Pravin Raman Parajuli met Governor Mahaprasad Adhikari and Deputy Governor Bam Bahadur Mishra on Tuesday.

Officials of the Sangh have requested to reconsider the difference of 2 percent in the interest rate against the deposit collected from institutional depositors like insurance companies. They argued that the money of fixed deposit invested by insurance companies is not a private source of the company but it is a savings collected from the general insured and should not be discriminated as an institutional deposit.

According to the new provision implemented through the monetary policy of current fiscal year, Nepal Rastra Bank maintained the interest rate gap of 2 percent for general deposits and institutional deposits. There was a gap of one percent in the previous year. 

Insurance companies are one of the major source of bank deposits these days. Banks themselves have been giving maximum interest rates to insurance companies to attract deposits. 

Following the new provision for interest rate cap, the insurance industry is supposed to loss over Rs. 6 billion annual with decreased interest rate.

Life Insurance Association has requested Nepal Rastra Bank to continue bancassurance. They argued that bancassurance should be maintained in Nepal as good practices are being practiced all over the world. They argued that it will help to increase access to insurance.

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