Nepal Rastra Bank to collect Rs 10 arba from the banking system on Tuesday; Increased liquidity causes Rastra Bank to take the decision  

Nepal Rastra Bank has planned to collect Rs 10 arba from the banking system today. Rastra Bank will be collecting the amount to control the liquidity in the market created due to the shortage of investable funds.

The central bank has planned to mop up the amount utilizing the instruments mentioned in Interest Rate Corridor Policy for 2 weeks. Rastra Bank has further stated that there is an excess of Rs 40 arba in the banking system. The central bank has also focused on the point that the main cause of rise in the liquidity is the increase in the government’s expenditure.

Rastra Bank collects amount from the market after the interest rate decreases below 3 % and sends money in the market after the interest rate exceeds 5%. The amount of Rs 10 arba which the Rastra Bank will collect will be matured on Ashadh 19.

However, the banks have been involved in an unhealthy competition to collect deposits by providing high rate of interests. Most of the banks have started providing 12% or more interest rates in the fixed deposits.