Central Bank to Issue Bonds Worth of Rs 20 Billion with 1 Year Maturity Period

Yesterday central bank published it's monetary policy highlighting major micro and macro economics indicator and today it has announced the issuance of central bank bonds worth Rs. 20 billion for a duration of one year. According to the notice published by the central bank's Monetary Management Department, the bond named "NRB Bond 2084 'Cha'" will be issued on Asar 24, 2083.

Only licensed Class ‘A’, ‘B’, and ‘C’ banks and financial institutions are eligible to participate in the bidding process.

The interest rate of the bond will be determined through the bidding process, and the interest earnings will be paid out to investors every six months. The total principal amount will be paid back upon maturity a year later on Asar 24, 2084.

Additionally these bonds can be used as collateral for loans at NRB or other financial institutions. While the invested amount cannot be used to meet mandatory cash reserve rules, it can be counted toward statutory liquidity ratio requirements. The central bank also warned that if a winning institution fails to have sufficient funds in its account on the issuance date, it will face a 2.50 percent financial penalty and a six month ban from participating in future open market bidding processes.