NRB’s call for Rs 10 arba reserve repo gets Rs 42 arba applications

ShareSansar, Sept 12

The reserve repo called by Nepal Ratsra Bank to reduce the excess liquidity in the market has been oversubscribed. The NRB had called for Rs 10 arba repo but applications were received for a whopping Rs 42 arba. Last week, the NRB received applications for 10 arba repo though it had called only for Rs 5 arba.

NRB calls for reserve repo to prevent interest rates in the banking system from sliding further.  Reserve repo is the process through which NRB collects deposits from banks.

The NRB has reduced the reserve repo rate from 0.08 percent to 0.06 percent this time in view of the surplus demand.

At present, commercial banks alone have amassed Rs 24 arba deposits. Last week alone banks added Rs 5 arba deposits, but they managed to disburse only Rs 1 arba in loans during the same period.
Timely budget and improved chances for elections has been cited as the reason for improved liquidity in the market.