Rs 20 arba to be release in the market, may pressurize banks to manage liquidity

Sharesansar, December 15:

Nepal Rastra Bank is going to release Rs 20 billion within this week causing high liquidity.

Nepal Rastra Bank’s as per the deposit buying scheme has collected Rs 10 billion each on two different schemes from commercial banks which going to be mature within this week. Deposit Scheme of Rs 10 billion issued on Asoj 1, 2071 is going to be mature on Tuesday.  Likewise, other Deposit Scheme of Rs 10 billion issued on Asoj 8, 2071 is going to be mature on Poush 8, 2071.  

“Banks participated in this deposit scheme will suffer to manage liquidity if they still are unable to increase lending comparison to deposits”, said Upendra Poudel, Chief Executive Officer of NMB Bank.  

According to Poudel, those banks which are unable to lend up to 70 percent of the total deposit might feel pressure to handle increased liquidity. NRB had directed Banks and financial institutions to manage their credit to deposit ratios up to 80 percent.

But Share Analysts assume that it may be supportive to the share market as there is high possibility from banks to increase margin lending which in turn increase the money supply in share market. There was Rs 1255 billion as deposit in Commercial banks as of 7 November, 2014.  Likewise, Banks has issue loans of Rs 971 billion.   

Weighted average interest rates for those schemes have been finalized from 0.58 to 0.74 percent. There were 31 participants on scheme issued on Asoj 1, 2071 and 21 participants on the scheme issued on Asoj 8, 2071.

Earlier, Nepal Rastra bank had introduced the deposit collection scheme as the new monetary instrument to absorb excess liquidity from banking system.