Base Rate + Premium: How Loan Interest Rates Are Set in Nepal
Every floating loan in Nepal, from home to car to business, is priced the same way. Understand the formula and you know where to push.
- Your rate = the bank's base rate + a premium set for you.
- The base rate reflects the bank's cost of funds and is published every month. Today's lowest are below.
- The premium depends on the product and on you: income, collateral, credit history and relationship.
- Negotiate the premium before you sign. It is the part you can actually change.
The formula
Banks in Nepal price floating-rate loans as base rate + premium. If a bank's base rate is 5.20% and it gives you a 2.00% premium, you pay 7.20%. When the base rate falls to 4.90%, your rate falls to 6.90%; when it rises, your rate rises.
What the base rate is
The base rate is the bank's minimum lending rate, calculated from what it pays for deposits and borrowings, plus the cost of the reserves NRB requires it to hold and its operating costs. Banks publish it every month. It falls when deposit rates fall, which is why loan rates in Nepal are much lower now than two years ago.
As of 16 October 2026, the lowest published base rate among the 36 banks and finance companies Byajdar tracks is 4.00% (Nepal Investment Mega Bank); the median is 5.94%.
| Bank | Base rate |
|---|---|
| Nepal Investment Mega Bank | 4.00% |
| Rastriya Banijya Bank | 4.01% |
| Standard Chartered Bank | 4.12% |
| Agricultural Dev. Bank | 4.55% |
| Machhapuchchhre Bank | 4.81% |
| Siddhartha Bank | 4.84% |
| Kumari Bank | 4.85% |
| Prabhu Bank | 4.94% |
Track it on the base rate page.
What the premium is
The premium is the bank's margin for the risk and cost of your particular loan. Each bank publishes a premium range for every product; that is why Byajdar shows loan rates as "from – to". The low end goes to borrowers the bank sees as safest: steady salaried income, strong collateral, a clean credit record, or a long relationship with the bank.
How to get a lower premium
- Start with your salary bank. It already sees your income.
- Bring quotes. Show a written offer from another bank.
- Offer stronger security or a bigger down payment.
- Keep your credit record clean. Late payments on cards or other loans show up in the Credit Information Bureau report.
- Get the premium in the offer letter. Banks generally cannot raise an agreed premium later except in limited cases, so the number you sign is the number you keep.
Floating vs fixed
Some banks offer fixed-rate loans for a set period. These usually start higher than today's floating rate, because the bank is taking the risk of rates rising. With base rates near their lows, a fixed rate is insurance: worth it if a rise would strain your budget.
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Frequently asked questions
What is base rate in Nepal?
The base rate is a bank's minimum lending rate, worked out from its cost of funds, the cost of reserves NRB requires and its operating costs. Banks publish it monthly, and floating loan rates are set as base rate plus a premium.
What is premium in a bank loan in Nepal?
The premium is the margin a bank adds on top of its base rate for a particular loan. Each bank publishes a premium range per product; your premium depends on your income, collateral and credit history.
How often do loan interest rates change in Nepal?
Floating rates follow the bank's base rate, which is published monthly. Your loan agreement states when your rate is reset.
Can a bank increase my premium after the loan is approved?
Generally no: the premium agreed in your loan is fixed except in limited cases set by NRB, such as a deterioration in your credit. Changes in your rate normally come from the base rate.
Rates and rules change. Byajdar is not a bank or a licensed adviser; confirm the current terms with the bank before you borrow.
Compare before you borrow: Compare loan rates across every bank → Or get matched with Find My Bank →