NRB gets bids worth Rs 31bn

KATHMANDU:

Financial institutions bid for securities worth Rs 31 billion on the central bank’s new bout of reverse repo.

The cash-flushed 20 financial institutions offered Rs 31.4 billion to Nepal Rastra Bank (NRB) in the 10th round of reverse repo worth Rs 19.5 billion, informed a high official at the central bank.

“The weighted average reverse repo rate for this round stood at 0.466 per cent,” said the official, adding that the minimum rate offered was 0.38 per cent while the maximum was 0.49 per cent.

During a reverse repo, financial institutions lend to the central bank against a collateral of government securities by bidding certain rates.

Whereas this is the 10th time that the central bank has used reverse repo to mop up excess liquidity from banks, this is the fifth time that NRB has issued reverse repo of more than Rs 19 billion. NRB has mopped up a total of Rs 166 billion from the financial system by launching reverse repos, outright sale auction and development bonds.

The persistent liquidity surplus at banks has brought down short-term interest rate below one per cent in the last six months. As of this week, commercial banks alone have about Rs 75 billion, which can be lent to viable projects.

Source: THT