If you have a floating-rate loan from any bank in Nepal, your interest rate is not a single number the bank picked. It is a formula set by Nepal Rastra Bank (NRB): base rate plus premium.
What goes into the base rate
Under NRB's Base Rate Directive, each bank calculates its base rate from four components:
- Cost of funds. The weighted interest the bank pays on deposits and borrowings.
- Cost of statutory reserves. Money parked with NRB as cash reserve ratio and statutory liquidity ratio earns nothing, so its cost is spread across lending.
- Operating cost. Salaries, branches, technology, as a share of assets.
- Return on assets. A small profit margin, currently capped by NRB.
Banks publish the result every month. That is the number you see on our base rates page.
What the premium is
On top of the base rate, each bank adds a premium per product. A home loan might carry 2 to 3.5 percent; a personal loan without collateral carries more, often 4 to 6 percent. NRB caps the premium on some priority loans, but for most retail lending the bank decides.
Your effective rate is simply:
Effective rate = Base rate + Premium
So if Nabil's base rate is 6.52% and its home loan premium is 2.4%, your rate is 8.92%.
When your EMI actually changes
Base rates move monthly, but most banks reset floating loans quarterly. If your bank's base rate falls in Bhadra, expect your EMI to be recalculated at the next quarterly reset, typically Kartik. Some banks reset annually for home loans. Ask your branch which reset schedule applies to your loan agreement.
What to do when rates move
- Rates falling: Do nothing, or use the refinance calculator to check whether a cheaper bank is worth the switching cost.
- Rates rising: Consider a partial prepayment. Our EMI calculator shows how much interest a one-time prepayment saves.
- Either way: Set a rate alert so you hear about the change the day it is published.