The Nepal Rastra Bank is set to withdraw Rs 40 billion from the banking system today through its deposit collection instrument.
The central bank is mopping up the amount after excess liquidity built up in banks and financial institutions, increasing the volume of loanable funds in the market. According to the bank, the Rs 40 billion will be withdrawn for a period of 88 days.
Over the past three years, Nepal Rastra Bank has been regularly withdrawing money from the market twice a week—on Sundays and Wednesdays. A few weeks ago, the central bank temporarily halted the deposit collection instrument after it began absorbing liquidity through bond issuance for two weeks. It has since resumed the regular twice-weekly liquidity absorption operations.
Banks and financial institutions willing to participate in the deposit collection can submit online bids until 3:00 pm today, according to a notice issued by the central bank. Only ‘A’, ‘B’, and ‘C’ class banks and financial institutions are eligible to participate in the bidding process.
The central bank has also stated that the deposit collection instruments purchased through the bidding process can be used as collateral with other banks and financial institutions.
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