NRB to withdraw Rs 50 billion in long-term deposits
NRB had initiated long-term deposit collection last week for a period of 175 days, and today it will continue its efforts to manage liquidity.
KATHMANDU: Nepal Rastra Bank (NRB) is set to withdraw Rs 50 billion from the financial system today, Wednesday, to manage excess liquidity.
The central bank will conduct the operation through a competitive bidding process using long-term deposit instruments.
NRB had initiated long-term deposit collection last week for a period of 175 days, and today it will continue its efforts to manage liquidity.
The bidding will be conducted online, with interest rates determined through the competitive process. The principal and interest of the instruments issued today will be payable on 16 Baisakh 2083.
Banks and financial institutions eligible to participate must bid in multiples of Rs 5 crore, with a minimum bid of Rs 10 crore, until the total announced amount is allocated.
Under its open market operations framework, NRB uses long-term deposit instruments to regulate liquidity and stabilize market interest rates.
The central bank may conduct long-term deposit operations for up to six months to address structural excess liquidity in the financial system.
Only licensed ‘A’, ‘B’, and ‘C’ category banks and financial institutions approved by NRB are allowed to participate in the bidding.
Allocation will be made starting with the lowest interest rate bids until the full amount is covered.
NRB emphasized that the move does not reduce immediate lending capacity of banks.
Currently, total deposits in the banking system have reached Rs 74.75 trillion, with the pace of deposit growth showing signs of acceleration in recent times.
