Decrease in 91 days T-bill rate to 0.0004% further signals interest rate cut by BFI’s

ShareSansar, February 1:

Bank and Financial Institutions (BFI’s) recently are suffering from excess liquidity situation which can be proved from the current rate of 91 days-Treasury bill recently auctioned by Nepal Rastra Bank. NRB stated that 91 days-Treasury bill which was auctioned on January 27 stands at 0.0004%. This clearly signals that there are huge amount of investable funds accumulated in banking sector mainly due to lack of investment opportunity.

Nepal Rastra Bank has recently issued 91 days Treasury bill worth Rs 50 crore to bank and financial institutions and there was more than 9 times demand which is equivalent to Rs 4.81 arba. The weighted average Treasury bill rate stood mere 0.0004 percent.

Earlier in January 6; Nepal Rastra Bank has issued Treasury bill with 91 days maturity with weighted average rate of 0.776 percent.

Treasury bills are the money market instrument that NRB use time and again to manage the excess liquidity situation in the banking system. NRB currently issues four different types of treasury bills, with maturity period of 28, 91, 182 and 364 days. Among these, the most preferred Treasury bill is the one with maturity period of 91 days.