A dilemma for banking customers
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Nepal, July 1 -- Nepal Rastra Bank recently issued directions to banks in Nepal to decide and publish their fixed interest rates on term loans. Against this backdrop, the scenarios and modalities for fixed interest rates in Nepal's financial market need to be analysed. In the international market, two types of interest rates are prevalent for term loans-floating and fixed interest rates.
A floating interest rate is the rate set by adding a risk premium to a variable reference rate such as LIBOR (London Inter-bank Offered Rate), Euribor (Euro Interbank Offered Rate), MCLR (marginal cost of funds based lending rate), SOFR (secured overnight financing rate) and base rate. In Nepal, this rate is called Base Rate. These reference rates change...
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