NRB to withdraw Rs 50 billion through 84-day deposit auction
The central bank is conducting the move to manage excess liquidity in the financial system and regulate interest rates.
KATHMANDU: Nepal Rastra Bank (NRB) announced that it will withdraw Rs 50 billion for 84 days through a deposit auction on Sunday.
The central bank is conducting the move to manage excess liquidity in the financial system and regulate interest rates.
Currently, total deposits have crossed Rs 7.4 trillion.
NRB has been using deposit collection instruments and standing deposit facilities to absorb surplus liquidity.
Only banks and financial institutions classified under “A,” “B,” and “C” categories, and authorized by the central bank, are eligible to participate in the auction.
The long-term deposit allocation will be made based on the interest rates bid by counterparties, with priority given to the lowest rates until the total auction amount is fully allocated.
The auction will be conducted online, with the interest rate determined through bidding.
The principal and interest of the deposits will mature on Falgun 5, 2083.
The minimum bid per institution is Rs 10 crore, while the maximum bid will be a multiple of Rs 5 crore, with any remainder adjusted within the total auction amount.
Under the central bank’s open market operations framework, if excess long-term liquidity is observed in the market, the Monetary Operations Committee can use deposit instruments of up to six months to manage liquidity and stabilize market interest rates.
NRB has repeatedly utilized this provision to conduct deposit auctions.
