NRB to collect Rs 7 billion to stabilize market liquidity & interest artes

KATHMANDU: Nepal Rastra Bank (NRB) is set to withdraw Rs 7 billion from the financial system today (Sunday) to control excess liquidity and maintain stability in market interest rates.

The central bank will conduct the deposit collection through a competitive bidding process.

Currently, with total deposits exceeding Rs 72 billion, liquidity pressures in the financial system have increased, prompting NRB to take this measure.

Excess liquidity in banks and financial institutions can cause fluctuations in interest rates, and NRB regularly uses such instruments to maintain balance.

Only licensed ‘A’, ‘B’, and ‘C’ class banks and financial institutions authorized by the central bank are eligible to participate in today’s bidding.

The distribution of the deposit collection amount will be based on the interest rates offered by counterparties, with priority given to bids at the lowest rate until the total target is met.

The online bidding system will determine interest rates based on market demand and supply.

The principal and interest payment of the collected deposits will be made on 12 Ashwin 2082 BS.

Bids can be placed for a minimum of Rs 10 crore, with the remaining amount allocated in increments of Rs 5 crore.

According to NRB’s open market operations guidelines, if the financial market experiences prolonged excess liquidity, the bank’s Operations Committee may use long-term deposit instruments for up to six months to regulate the market interest rate.

Following this provision, NRB continues to undertake such measures to ensure stability in the financial market and manage liquidity effectively.