Your savings account pays 2.75%. Inflation is 5.22%. What a year of that costs

A cousin brought her passbook to Dashain last year and to a family lunch again last month, mostly to complain about the same thing. Rs 6 lakh sitting in a savings account since her SLC-era job began, untouched, growing by a few thousand a year. She has never lost a rupee of it.

She has, though. The number in the book climbs every quarter. What that number buys has been shrinking since roughly Falgun, and the gap has widened every month since.

The month the arithmetic flipped

For most of the last decade a Nepali deposit did its job quietly. It paid a little more than prices rose, so the money grew slowly in real terms and nobody had to think about it. That stopped in Falgun.

NRB publishes a weighted-average deposit rate for commercial banks each month alongside the CPI print. Lining the two up shows exactly where the cushion ran out.

Two lines moving in opposite directions at once. Deposit rates slid about 0.9 percentage points over the year while inflation nearly tripled off a very low base.

Count the tax and it flipped a month earlier. Interest is taxed at 6%, so a 3.51% gross rate in Magh is 3.30% in hand against 3.25% inflation, and by Fagun the net rate is behind. (Calculation: gross rate × 0.94. Standard interest-and-tax arithmetic.)

This is recent enough that a lot of published advice has not caught up. In April 2026 the Kathmandu Post could still write that "low inflation has ensured that real interest rates, adjusted for price changes, remain positive, providing some cushion for savers." That was fair when it ran. Averaged across the whole fiscal year the picture still favours savers, since eleven-month average inflation was 2.89% against a deposit rate averaging roughly 3.7%. The averages hide the turn. The last four months of the year are what your money is living in now.

Whether 5.22% even captures it is contested. Ram Prasad Gyawali of Tribhuvan University's economics department put it bluntly in June: "The central bank says inflation is at 5 percent, but inflation in the market is closer to 8 percent." That is an assertion against the official series rather than a measurement, but it matches what the Kathmandu grocery basket has done.

What 2.75% actually costs

The averages above are what the banking system pays across all its old and new deposits. The rate on offer to you today is lower. Every Class A bank whose own rate sheet I could open for Shrawan 2083 (Nabil, Everest, Siddhartha, NMB, Prabhu) publishes 2.75% on normal savings, all effective 17 July 2026.

Here is what a year at each available rate does to Rs 1,00,000, after 6% TDS, against 5.22% inflation.

(Purchasing-power figures are my calculation: balance after net interest, divided by 1.0522.)

Nothing on the shelf clears inflation. The best commercial-bank fixed deposit in the country, 4.55% at Nabil or Prabhu, still loses about 0.9 percentage points a year in real terms. Development banks and finance companies advertise higher, and where to park money now covers what that extra rate is paying you for. My cousin's Rs 6 lakh in general savings is shedding roughly Rs 15,000 of purchasing power a year while she watches the balance rise.

The Rs 25,000 interest exemption people sometimes cite does not help here. Section 11(2Ka) of the Income Tax Act limits it to microfinance institutions, rural development banks, postal savings banks and co-operatives operating in a rural municipality. Commercial bank interest is taxed at 6% from the first rupee, and it is a final tax, so there is nothing to reclaim at filing. The mechanics of how the interest is worked out before the tax lands are in how savings interest is calculated.

Why every bank lands on nearly the same number

The obvious suspicion is a rule forcing 2.75%. There isn't one. NRB's Unified Directives set no minimum savings rate at all, and Directive 15/082 explicitly lets each bank set its own rates and computation method.

What produced the cluster is the same thing that produced the low rate: banks do not need your money. Deposits grew 15.0% over eleven months while private-sector credit grew 6.5%, and by late May the system was sitting on about Rs 1.38 trillion of lendable liquidity it could not place. A bank with more deposits than borrowers has no reason to bid.

Directive 15/082 does shape the rate sheet in ways worth knowing, because two of them are levers:

• A bank's savings products must sit within 2 percentage points of each other, and the spread between its highest and lowest rate across all rupee deposits within 5 percentage points.
• Published rates can change only once a month, before the Nepali month begins. The sheet you see on the 3rd of Bhadau is fixed until Asoj.
• Savings interest must be computed on your daily balance, and credited at least quarterly. Keeping a big balance for 29 days and withdrawing on the 30th still earns for those 29 days.
• A call deposit may not pay more than half the bank's minimum savings rate.
• Individual fixed deposits shorter than three months are not permitted at all.

One widely repeated rule is no longer live. Banks used to be required to price institutional fixed deposits at least 1 percentage point below individual ones. NRB repealed that in Circular 7 of 2 December 2025, and the Shrawan sheets show the effect: Nepal Bank now publishes 4.25% individual against 4.00% institutional, a gap the old rule forbade. Any guide still stating that requirement in the present tense is out of date.

The percentage point most households never claim

If any part of your household income arrives as remittance, you are entitled to more than 2.75% and probably are not getting it.

Directive 15/082 §1(5) requires banks to pay at least 1 percentage point above their published normal rate on remittance savings accounts, on fixed deposits funded from them, and on deposits held by the recipient family of remittance sent in their name. That premium is explicitly exempt from the 4.0% lending spread cap, which removes the bank's usual reason to resist. Nabil's premium remittance savings pays 3.80% against its 2.75% general rate.

It does not close the inflation gap. It cuts the annual real loss on Rs 1 lakh from about Rs 2,504 to about Rs 1,566, which is a Rs 938 improvement for a form and a conversation at the counter. For a household receiving regular remittance from the Gulf, Korea or Australia, on a balance of several lakh, this is the single highest-return paperwork in Nepali retail banking. Worth pairing with the cheapest way to receive remittance, since the channel you use to bring the money in is a separate cost from the rate it earns once it lands.

Ask specifically for the remittance product. It is rarely offered.

Savers already voted

The interesting part is not that rates fell. It is that Nepali depositors noticed and moved, at a scale that shows up plainly in NRB's balance sheet.

Fixed deposits peaked at 58.9% of all bank and financial institution deposits in mid-July 2023 and have fallen to 37.3%. In rupee terms the fixed-deposit book is down about Rs 655 billion from its 2024 peak, while savings balances rose 39.7% and call deposits 28.1% in eleven months. Total deposits across all BFIs stand near Rs 8.05 trillion across some 63 million accounts.

Santosh Koirala, president of the Nepal Bankers' Association, read it the same way in April: "As the gap between savings and fixed deposit rates has narrowed considerably, depositors are increasingly choosing to hold funds in savings accounts."

That is a rational response to a 4.17% average fixed rate. Locking money for a year to earn 1.4 points more than an instant-access account is a thin trade, and it explains why the money went liquid rather than long.

Some of it left the banks. Silver imports hit Rs 32.74 billion in FY 2082/83, up 366% and overtaking gold by value for the first time. SEBON approved Rs 37.03 billion of mutual fund issuance in eleven months, which was 69% of all public issuance approvals. Demat accounts crossed 8 million, though only about 400,000 of them trade.

The honest footnote: leaving did not pay either. NEPSE fell 7.05% over FY 2082/83, closing at 2,597.80, with turnover down about a quarter. The money that fled deposits mostly went into metals, liquid accounts, and demat accounts that sit idle. A negative real return is not, by itself, a reason to buy something risky.

The published rate is not the rate you get

One trap when comparing sources. NRB's weighted-average fixed deposit rate reads 4.99%, which looks like it nearly clears inflation. That figure is stock-weighted across deposits already on the books, and it is held up by an older, longer-dated block still earning far more.

Nearly half the book, 47.5%, matures inside a year at a weighted 3.39%. The 8.01% bucket is legacy money locked when rates were high, and it is draining: that same bucket paid 10.30% at mid-July 2024 and 9.00% at mid-November 2025.

So 4.99% describes what the system pays on old money. 4.55% is the best rate you can actually buy today. Quote the first when you mean the stock, the second when you mean the offer, and never compare one bank's advertised rate to the system average. The mechanics behind why the whole curve dropped are in the base rate and the NRB corridor.

Relief is not in the forecast. NRB's own Monetary Policy for FY 2083/84, published 7 July 2026, targets inflation "of around 5.5 percent" and left the policy rate at 4.25%, the deposit collection rate at 2.75% and the corridor ceiling at 5.75%. The central bank's inflation target now sits above the entire weighted-average deposit rate.

What you actually need to know

1. The real return on Nepali deposits turned negative in Fagun 2082, and the gap is widening. Savings pays 2.85% on average and 2.75% at most banks today, against 5.22% inflation. After 6% TDS, Rs 1 lakh in general savings buys about Rs 97,496 a year later. Rs 6 lakh loses roughly Rs 15,000 of purchasing power a year.
2. Claim the remittance premium if your household qualifies. Banks must pay at least 1 percentage point above their normal savings rate on remittance-linked accounts, and it is exempt from the spread cap. Almost nobody asks. It is the cheapest improvement available.
3. Negative real returns are not an instruction to buy risk. NEPSE lost 7.05% over the same year. Emergency and near-term money belongs in a deposit even at a real loss, because its job is certainty. For money with a longer horizon, where to park it now works through the options by risk.

Sitting on a balance you are not sure how to split between instant access and something longer? Email parjanya57@gmail.com with the amount and when you'd need each part, and I'll work the horizon split through with you.

This post is part of the Nepal Money Basics guide — the saving section.