Nepal Rastra Bank (NRB) has announced that it will withdraw NPR 50 billion in deposits today (Sunday) to manage the surplus liquidity in the financial system. Currently, total deposits in the system have exceeded NPR 7.6 trillion.
The central bank uses deposit collection instruments and standing deposit facilities to manage excess liquidity and regulate interest rates. Only ‘A’, ‘B’, and ‘C’ class banks and financial institutions authorized by NRB are eligible to participate in the bidding process.
During the long-term deposit collection, the allocation of funds will be done according to the interest rates offered by counterparties, with the lowest interest rates receiving priority. The auction will be conducted online, and the interest rate will be determined through the bidding process. The principal and interest on deposits collected today will be paid on Chaitra 8, 2083 (Nepali calendar).
The minimum bid amount is NPR 100 million, and bids can be placed in multiples of NPR 500 million, with any remainder being adjusted to match the total amount called for.
As per the central bank’s open market operation procedures, when there is excess long-term liquidity in the financial market, the NRB can use long-term deposit collection instruments for up to six months to manage the market and regulate interest rates. Using this mechanism, the central bank has repeatedly conducted deposit collection operations to maintain liquidity stability in the market.
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