Nepal Rastra Bank (NRB) has announced its intention to collect deposits amounting to Rs 10 Arba through a public bidding process in order to address the prevailing excess liquidity in the market. The central bank aims to draw funds for a one-week period, with the maturity date set for Mangsir 24th.
The announcement comes at a time when the market is experiencing an overflow of liquidity, a situation that the NRB seeks to manage through targeted deposit collection. The central bank has issued a notice inviting applications from interested banks and financial institutions falling under categories A, B, and C.
Prospective participants are required to submit their applications by 2 pm on the 17th of Mangsir 2080, as per the notification released by the NRB. The central bank has outlined specific criteria for applicants, with a minimum deposit requirement of 10 crore rupees and a maximum limit of 5 crore rupees, including the proposed interest rate.
The interest rate for the deposit collection will be determined through a negotiation process, and the NRB has emphasized that multiple interest rates can be considered during the bidding. This flexibility is aimed at fostering a competitive environment and ensuring an optimal outcome for both the central bank and participating institutions.
As of the latest information provided by Rastra Bank, the market is currently flooded with over 5 kharba rupees of liquidity. The weighted average interbank rate in the market stands at 1.89%. The move by the NRB to collect deposits through public bidding reflects a strategic approach to liquidity management in the financial system.
The NRB's decision is expected to have a notable impact on the overall market dynamics, influencing interest rates and contributing to the effective management of liquidity in the Nepalese financial landscape. Interested parties are keenly observing the developments as the central bank takes proactive measures to balance liquidity in the market.