NRB holds fourth reverse repo

KATHMANDU:

Excess liquidity with financial institutions seems to have subsided as subscription at the fourth round of reverse repo worth Rs 10 billion held by the central bank stood at Rs 13 billion.

Financial institutions have bid for securities worth Rs 13 billion on today’s reverse repo held by Nepal Rastra Bank (NRB). “We received sealed bids from 15 financial institutions,” said an official at NRB. “The reverse repo rate this time was fixed at 0.054 per cent,” added the official.

This is the fourth round of seven-day reverse repo since the beginning of September. Last week, NRB had received bids for securities worth Rs 21 billion for reverse repo held for securities worth Rs 10 billion at 0.03 per cent rate from 21 financial institutions.

The decline in the amount of bids and number of financial institutions and rise in the reverse repo rate may be an indicator that surplus liquidity is depleting.

On September 4, NRB conducted reverse repo worth Rs five billion at 0.08 per cent rate and on September 10 it conducted another of Rs 10 billion at 0.06 per cent. Prior to that, NRB had done reverse repo back in September 2010. Reverse repo refers to the central bank accepting deposits from banks against the collateral of securities with the central bank at a certain rate.

Source: THT