Nepal Rastra Bank to Collect Rs. 150 Billion Through 8-Day Deposit Auction

Nepal Rastra Bank (NRB) is set to collect Rs. 150 billion through an 8-day deposit collection instrument as part of its monetary management operations.

The Monetary Management Department of NRB, Thapathali, has announced that the auction for the deposit collection instrument will be conducted on Kartik 12, 2083 through the Online Bidding System Software (OBSS).

According to the notice, the central bank will collect Rs. 150 billion through the 8-day deposit collection instrument. The deposit will be issued on the same day as the auction, while the principal and interest will be paid on Kartik 20, 2083.

The interest rate for the instrument will be determined through the competitive bidding process.

Eligible bidders can submit bids for a minimum of Rs. 100 million, while bids can be increased in multiples of Rs. 100 million up to the total called amount.

The auction will remain open until 3:00 PM on Kartik 12 and will be conducted exclusively through the OBSS.

Bidders are required to specify the amount they wish to deposit along with the interest rate, with interest rates allowed to be quoted up to four decimal places.

Multiple bids at different interest rates can also be submitted.

Only Class A, Class B, and Class C banks and financial institutions licensed by Nepal Rastra Bank will be eligible to participate in the auction.

While allocating the called amount, NRB will give priority to bids offering the lowest interest rates and continue allocating the amount in ascending order of quoted rates until the total called amount is reached.

If the amount of bids received at the same interest rate exceeds the remaining amount available for allocation, the amount will be distributed on a pro-rata basis.

The Open Market Operations Committee under the Monetary Management Department will have the authority to accept or reject all or part of the bids received.

The deposit collection instrument can be used as collateral at banks and financial institutions other than Nepal Rastra Bank, according to the central bank.

The amount corresponding to accepted bids will be debited from the respective counterparty's account maintained at Nepal Rastra Bank and credited to a separate account for collected deposits.

If an accepted bidder does not maintain sufficient balance in its account on the issuance date, the concerned counterparty may be blacklisted and barred from participating in subsequent auctions.

The collected deposit will form part of the investment portfolio of the respective bidder. Therefore, the deposited amount cannot be counted toward the mandatory Cash Reserve Ratio (CRR).

However, the amount can be counted toward the Statutory Liquidity Ratio (SLR) and Liquidity Ratio as prescribed by Nepal Rastra Bank.

The deposit will not be eligible for premature repayment before its scheduled maturity date.

On the maturity date, the collected principal amount along with the applicable interest will be credited to the respective bank's account maintained at Nepal Rastra Bank.