Nepal Rastra Bank to Collect Rs 100 Billion from Market to Manage Excess Liquidity

Nepal Rastra Bank (NRB) is set to collect Rs 100 billion in deposits from the market today as part of its efforts to manage excess liquidity in the banking system.

The central bank’s Monetary Management Department has invited bids to collect Rs 100 billion through a deposit collection instrument for a maturity period of 83 days.

The bidding process will be conducted through the Online Bidding System Software until 3:00 p.m. today, with the deposit collection instrument also scheduled to be issued today.

The interest rate on the deposit collection instrument will be determined through the bidding process. The principal and interest will be repaid on Ashwin 27, 2083 BS.

Participants can submit bids starting from a minimum of Rs 100 million up to the total amount called by the central bank. A single participant may submit multiple bids at different interest rates.

Only Class ‘A’, ‘B’ and ‘C’ banks and financial institutions licensed by Nepal Rastra Bank are eligible to participate in the bidding process. Applicants must specify the amount they wish to deposit and the interest rate, with rates quoted up to four decimal places.

According to the central bank, bids will be accepted starting with the lowest interest rate until the total amount called for is allocated. If demand exceeds the available amount at the same interest rate, the allocation will be made on a pro-rata basis. The Open Market Operations Committee has the authority to accept or reject bids, either fully or partially.

The deposit collection instrument will be counted as part of the banks’ investment portfolio. While the amount collected through the instrument cannot be counted toward the Cash Reserve Ratio (CRR), it can be counted toward the Statutory Liquidity Ratio (SLR) and liquidity ratio.

The central bank has also clarified that the instrument will not have a pre-maturity payment facility.