NRB to absorb Rs 45 billion deposits amid excess liquidity

KATHMANDU: Nepal Rastra Bank (NRB) is set to absorb Rs 45 billion in deposits on Wednesday through an auction under its deposit collection instrument, as liquidity in the banking system remains excessive.

The central bank stated that total deposits in the financial system have now exceeded Rs 7.2 trillion, prompting the move to manage surplus liquidity and stabilize interest rates.

NRB has been regularly utilizing deposit collection instruments and standing deposit facilities for this purpose.

Only licensed banks and financial institutions in categories A, B, and C are eligible to participate in the auction.

Bids will be allocated based on the lowest offered interest rates, with priority given until the total announced amount is covered.

The auction will be conducted through the online bidding system, and interest rates will be determined through competitive bidding.

Repayment of both principal and interest on these deposits has been scheduled for Ashwin 5, 2082 BS.

The minimum bid amount has been set at Rs 1 billion, while bids must be divisible by Rs 50 million without remainder, up to the total announced amount.

As per NRB’s Open Market Operations Procedures, the central bank can deploy long-term deposit collection instruments of up to six months whenever excess structural liquidity persists in the financial system.

In line with this provision, NRB has repeatedly conducted such operations to maintain monetary balance.