Nepal Rastra Bank to collect Rs 10 billion through deposit auction from BFI’s

Sharesansar, January 6:

Nepal Rastra Bank (NRB) is collecting Rs 10 billion from the banks and financial institutions (BFIs) through deposit auction instrument. NRB plans to absorb the liquidity from the market for 3 months period.

The central regulatory bank had introduced this new instrument through its Monetary Policy for Fiscal Year 2014/15 after its other short-term instruments, including frequent reverse repos, failed to resolve the liquidity surplus problem in the banking system.

Though BFIs can count their deposit in NRB as the statutory liquidity ratio (SLR), the returns to them have remained negligible so far due to the competitive bidding process.
 
The interest rates of the deposit auction are fixed through the auction. The weighted interest rate of the last deposit auction held for Rs 5 billion was 0.24 percent.